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I STRATEGY: A RESILIENT BUSINESS 2. How climate risks are identified, measured, and monitored
2.1 Insertion of climate risk management in the risk framework of the Group
MODEL TO FACE CLIMATE CHANGE 2.2. Identifying the climate-related risk events
2.3 Assessing potential impacts of climate risks through climate scenario
analyses and stress testing
1. BNP Paribas embeds climate and transition towards carbon neutrality at
the core of its strategy 2.4 New tools to further assess and monitor climate risks
1.1. On track for sustainability within the 2025 Strategic Plan 3. Focus on key risks
1.2. BNP Paribas’ strong commitments to combat climate change
3.1 Credit Risk: ESG Assessment, clients'environment and climate perfor-
1.3 Committed to a net zero economy by 2050: BNP Paribas monitors its mance, review and challenge during the credit process
financing and investment activities
3.2. Operational Risk
1.4 BNP Paribas reduces its own operational emissions
3.3 Market Risk
2. BNP Paribas identifies primary climate-related risks and opportunities
2.1 Climate change and its consequences are identified as risk drivers for
BNP Paribas
2.2. The energy transition also represents opportunities for BNP Paribas
FACE CLIMATE CHANGE end, the Group engages continuously with its clients to create
a sustainable low-carbon future, mobilises resources in favour
obviously central to the priority theme “Transitioning towards
carbon nautrality”, it is also deeply connected to the others,
of projects that will have a positive impact and innovates to be such as “Circular economy” (e.g. via the reduction of resource
a leader in sustainable finance. consumption and the decrease in associated energy) or "Natural
capital & biodiversity” (e.g. via the fight against deforestation)
In line with its company purpose, BNP Paribas’ 2025 strategic
or “Sustainable savings, investments and financing” (e.g. via
plan, named “Growth, Technology, Sustainability” (GTS),
green bonds issuance, reducing carbon footprint of investment
places sustainability, including climate-related issues, at the
portfolio, etc.).
heart of the Group's strategy. Within the Sustainability pillar
of the plan, the Bank has defined five priority themes that
GROWTH
2025
TECHNOLOGY
SUSTAINABILITY
The Group has defined three strategic areas to accelerate the implementation of its commitments in CSR and sustainable finance:
1. Aligning its portfolios with its objective for carbon neutrality (see Part IV. Metrics, targets and alignment progress).
2. Engaging with clients to support them in the transition towards a sustainable low-carbon economy (see Part II. Section 3.
BNP Paribas supports the low-carbon transition of all its clients).
3. Strengthening steering tools, processes and set-ups (see Part II. Section 2. Tools, processes, and set-ups strengthened to
address climate change).
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1.3 Committed to a net zero economy by 2050: BNP Paribas monitors its financing and
investment activities FOCUS | Accelerating in the financing of the energy
transition
As of now, the broader low-carbon ecosystem (renewable
manufacturers, hydrogen, storage, etc.) is not taken into
account.
As of 30 September 2023, BNP Paribas’ financing of Additionally BNP Paribas has already implemented or ini-
SECTOR FINANCING AND INVESTMENT POLICIES ACTIVITY MONITORING AND EXCLUSION LIST low-carbon energies had reached EUR 32 billion, repre- tiated an exit trajectory for each of the fossil energies:
Since 2010, as part of the implementation of its strategy to To identify the companies with the highest environmental senting a total of 65% of the Group’s financing to energy
An already very advanced exit from thermal coal, defini-
combat climate change, BNP Paribas has developed ESG risks, in addition to sector financing and investment policies, production. Within the financing for low-carbon energy,
tive by 2030 in the European Union and the OECD, and
financing and investment sector policies covering eight BNP Paribas manages an activity monitoring and exclusion list. renewables accounted for EUR 28.8 billion, an increase of
by 2040 in the rest of the world.
sectors2, including the energy sectors with the largest impact The clients under monitoring are subject to close supervision EUR 4 billion in one year due to an increase in financing of
A fully completed exit from non-conventional hydrocar-
on climate change. These restrictive policies lay down strict to ensure that they are transitioning their activities toward renewables across all client segments (utilities, non power
bon specialists: in 2017, BNP Paribas stopped suppor-
ESG criteria, including some related to climate. The policies lower emitting business practices. The Group prohibits any companies, households). Exposure to nuclear and biofuels
ting companies whose primary business is exploration,
are regularly updated: for instance, in 2023, the Group new business relationship with companies under exclusion. At remained stable over the last year. By 2030, the Group
production and export of gas or oil from shale oil and
excluded all financing for projects related to the extraction of the end of 2023, the number of companies under monitoring now targets 90% of its energy financing towards low-car-
gas and from tar sands specialists. In 2022, BNP Paribas
the metallurgical coal. was 286, while the number under exclusion reached 1,432. bon.
also tightened its financing restrictions in particularly
Regarding the energy sector, following the announcement in This low-carbon exposure covers drawn and committed
sensitive ecosystems such as the Arctic and the Ama-
VIGILANCE PLAN undrawn amounts. It has been built as an addition of five
2020 of a strategy for a full exit from the thermal coal value zon4.
chain by 2030 in the European Union and OECD countries, and exposures:
Since the adoption of the French Duty of Care Law in 2017, In the oil sector, BNP Paribas will reduce its financing of
by 2040 in the rest of the world, BNP Paribas conducted a BNP Paribas is implementing a vigilance plan to identify and Exposure to renewable power generation from power
oil exploration and production by 80% by 2030, compared
comprehensive analysis of its clients portfolio. prevent the risks of serious violations to human rights and generation actors: this computation is based on the re-
to end of September 2022, as follows:
In 2017, BNP Paribas stopped supporting companies whose fundamental freedoms, harm to human health and safety, and newable share in the power generation capacity mix of
The end of financing purely dedicated to the develop-
primary business is exploration, production and export of harm to the environment. It applies to all employees, activities, each legal entity as provided by the data provider Asset
ment of new oil fields regardless of the financing me-
gas/oil from shale oil, from tar sands or gas/oil production in subsidiaries controlled by the Group, including suppliers and Impact.
thods (project financing, reserve-based lending, FPSO).
the Arctic. In 2022, BNP Paribas also tightened its financing subcontractors, and is published in the Group's Universal Exposure to nuclear power generation from power gene-
The phasing out of financing for non-diversified oil
restrictions in particularly sensitive ecosystems such as the Registration Document each year. ration actors (utilities, renewable developers and ope-
upstream players (independent oil companies) and in-
Arctic and the Amazon. In BNP Paribas' vigilance plan2, climate change and energy rators): this computation is based on the nuclear share
tended to support oil production (corporate financing
In 2023, the Group accelerated again its exit from fossil fuels: transition stood out in the materiality matrix that classifies in the power generation capacity mix of each legal en-
or reserve-based lending).
BNP Paribas no longer grants financing for the development around a hundred extra-financial topics according to their tity as provided by the data provider Asset Impact.
relevance for the Group’s internal and external stakeholders. The reduction of general purpose lending allocated to
of new oil or gas projects, regardless of the financing terms Exposure to renewable power generation: some transac-
The Group's vigilance approach includes the risk of harm to oil upstream.
(project financing, reserve-based lending, FPSO), nor to non- tion can come from non-power generation actors such
diversified players in oil exploration and production. the environment, considering climate physical and transition as supermarkets, IT companies, etc. when such compa- As regards gas exploration and production, BNP Paribas
risks, and GHG emissions (CO2, methane, and others). nies are developing a renewable project, the transac- also excludes all financing dedicated to the development
tion is identified and included in the calculation. of new capacities. The amount of financing for gas
exploration and production will be reduced by more than
Exposure to renewable power generation from
30% by 2030 compared to the end of September 2022. The
households: it is based on identified renewable transac-
Group may contribute to the financing of new-generation
tions in the Bank’s internal systems.
thermal power plants with low emission rates as well as,
Exposure to biofuels: it is based on biofuels' industry
if necessary, of the infrastructure needed for security of
code in the Bank’s internal systems.
supply (gas terminals, gas transportation fleet, etc.), to
take into account current geopolitical factors.
2022 2023
54% 46% 65% 35%
32.0
28.2
35 35
23.7
30 30
17.3
25 25
Renewables
9.0
Nuclear
15 15
5.3
4.3
Refining
10 10
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BNP Paribas Universal Registration Document and Annual Financial report 2023, page 704
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Furthermore, the consequences in terms of liability may arise and investors, including liability risks, as a subset of physical
Weight of fossil fuels and low-carbon energies
from these two risk factors. They could result in to potential and transition risks.
in BNP Paribas credit exposure for energy production* disputes, claims for compensation, or legal proceedings
More specifically, the consequences of climate change on the
brought against a company, a State or a financial institution
Group's activity are considered in the risk identification framework
that could be held liable by any stakeholder or citizen who
as risk drivers and integrated in the Group’s risk management
90% 65% 90% has suffered from climate change. In line with international
scheme. The potential impact of these risk drivers is monitored by
54% 80% work and in particular that of the Network of Supervisors
BNP Paribas as it conducts its own business and that of
and Central Banks for Greening the Financial System (NGFS),
its counterparties, and in its proprietary and third-party
BNP Paribas considers the risks associated with the emergence
investments.
46% 20% of legal proceedings related to climate change for companies
10% 35% 10%
* *Source: internal management figures – 2012-2022 illustrative trajectory; The scope of low-carbon energies could evolve as technologies mature.
2.1 Climate change and its consequences are identified as risk drivers for BNP Paribas
Climate change and its consequences are identified as risk PHYSICAL RISKS: resulting from the direct impact of climate
drivers for BNP Paribas, and recognised as such in its Universal change on people and assets due to extreme weather events or
Registration Document (URD). In particular, the chapter 5 long-term shifts in climate patterns such as rising sea levels
meets legal and regulatory requirements related to risks of the or rising temperatures.
BNP Paribas Group5.
TRANSITION RISKS: resulting from a change in the
Environmental risks and, more particularly, those associated behaviour of economic and financial agents in response to
with climate change are likely to translate into financial risks the implementation of energy policies, change in regulation,
for the Group. It is exposed to risks related to climate change, technological innovations or changes in consumer preferences.
either directly through its own operations or of its assets,
or indirectly through its financing and investment activities.
The main typical risk factors related to climate change are as
follows.
5
Chapter 5 - Pillar 3 of the 2023 URD, page 526.
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Legend: Short term (ST) is within two years, medium term (MT) is between three to five years, and long term (LT) is after five years.
Legend: Short term (ST) is within two years, medium term (MT) is between three to five years, and long term (LT) is after five years.
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IMPLEMENTATION:
Various climate scenarios, published by recognised
international bodies (e.g. IEA, NGFS), are used to investigate (Low-Carbon Transition Group), training all employees on these
their consequences for the Group. In particular, the Group topics through its Sustainability Academy, developping robust
assesses the compatibility of its risks’ exposure with a carbon
neutral trajectory, and the extent to which the Bank can
tools to be used during the decision-making process (Risk ID,
ESG Assessment, etc. see Part III. Section 2. How climate risks A GROWING MOBILISATION TO
are identified, measured and monitored).
ACCELERATE THE ENERGY TRANSITION
contribute to financing the low-carbon transition while keeping
a very strong resilience. Several climate scenarios were also
BNP Paribas’ strong commitments on climate can have
used for the European Central Bank (ECB)’s 2022 climate stress
different impacts on its business relationships with some of its
test. These risk and opportunity analyses provide key elements
clients, and on associated business opportunities (see Part II.
for the strategy of the Group.
Section 3. BNP Paribas supports the low-carbon transition of
These analyses in combination with its transformation all its clients):
contribute to the Group’s resilience to the environment and
climate, which is made possible by two key elements: BNP Paribas supports its clients in their own energy
transition, helping them finance the necessary changes in
Climate risks may vary depending on business lines,
their business models and activities.
geographical areas, and economic sectors. BNP Paribas’
diversified and integrated business model, the diversity of The energy transition provides new financing opportunities
the Group’s business lines, sectors and geographies in which (renewable energies, low-carbon hydrogen, energy
it operates are therefore key assets to mitigate risks of all renovation, electric mobility, etc.).
kinds, especially climate risks.
Sustainability is at the core of the 2025 GTS strategic plan Climate-related opportunities are expected to be significantly
and is reinforced by the commitment of BNP Paribas to more important than the decrease in business resulting from
align its activities with a carbon neutrality trajectory by climate mitigation. This reflected in the Group’s KPI on the
2050. This Group level commitment supports the reduction support for the transition of its corporate clients to a low-
of BNP Paribas’ exposure to economic players responsible carbon economy, for which BNP Paribas set a target of EUR
for generating the highest GHG emissions, and thus of its 200 billion by 2025.
exposure to transition risks.
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BNP PARIBAS HAS A STRONG CLIMATE GOVERNANCE TOOLS, PROCESSES, AND SET-UPS STRENGTHENED TO ADDRESS
1 2 CLIMATE CHANGE
1.1 The Board of directors oversees the management of climate-related issues 2.1 Further accelerating the transformation of the whole Group
The Board of directors approves the Group’s CSR strategy. It validates the climate-related metrics, policies and undertakings In addition to the appropriate governance described in the strengthening the integration of CSR and climate issues into
presented in the Universal Registration Document (URD) and approves the variable compensation granted to corporate officers, previous section, the effective implementation of BNP Paribas' the Group's strategy and within each of its entities. Among
partially based on the Group’s CSR performance (including climate-related). The Board is regularly informed of the progress made agenda to tackle climate change requires a transformation them, the Sustainable Finance Strategic Committee chaired
in the implementation of the Group’s CSR strategy. In 2023, it addressed ESG topics 29 times, including the financing of the energy at all levels of the company. The Group deploys very by BNP Paribas’ CEO, takes decisions on the Group’s net zero
transition and BNP Paribas’ netzero trajectory, as well as the preliminary analyses of the corporate loan portfolio with regard to ESG significant resources and efforts into further accelerating its commitments. It also analyses the impacts and implementation
risk factors. transformation and developing the right tools, processes and of new regulations related to sustainable finance and the
set-ups to support the low-carbon transition of all its clients. expectations of the ECB (European Central Bank) regarding
Since 2010, BNP Paribas has gradually deepened and broadened climate and environmental risks.
Two specialized committees within the Board of directors the integration of its climate agenda and commitments in
the whole Group, from Functions (Finance, RISK, IT, Human
Corporate Governance, Ethics, Nominations Internal Control, Risk Management and Resources, LEGAL, Publics Affairs, etc.) to business lines. In FOCUS | ESG data as a key lever
1 and CSR Committee (CGEN) 2 Compliance Committee (CCIRC) particular, the ESG Assessment (Part III. Section 3. Focus on
key risks) is an in-house dedicated tool that allows the Group A comprehensive combination of ESG data, sophisticated
to reinforce the strategic dialogue with clients on ESG matters, analytics, and advanced technology is key to tackle the
including climate issues. More than 3,000 large and very large climate challenge. BNP Paribas is thus committed to
corporate clients were evaluated using this tool by the end of developing the right tools to measure its impact on
This committee oversees issues relating to social and This committee advises the Board of directors on the sui- 2023, representing almost the entirety of the Group’s clients climate and support material transition of its clients. One
environmental responsibility. It ensures that the Group tability of BNP Paribas’ overall strategy and tolerance for in these segments. The tool has also been adapted to cover of the main challenges for BNP Paribas remains the
contributes to sustainable and responsible economic de- risks, including climate-related risks, both current and fu- mid-size clients (with an annual turnover greater than EUR 50 external data quality of the environmental climate-
velopment, including climate action. ture. It also performs assessment over the achievement million) and financial institutions throughout 2024. related information.
of the Group’s risk policy, in coordination with the RISK
Function and in accordance with regulatory requirements. Since 2021, high level committees have been working on
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BNP PARIBAS SUPPORTS THE LOW-CARBON TRANSITION SELECTED EXAMPLES OF 2023 CLIMATE-RELATED BUSINESS CASES
3 OF ALL ITS CLIENTS
FINANCING LOW-CARBON ENERGIES
ReNew Power, a major Indian player in renewable electri- CPBF (Commercial & Personal Banking in France) co-led fi-
city production, obtained a loan of USD 1 billion to finance nancing to Kallista, an independent renewable energy’ pro-
To support its clients in their transition towards global carbon neutrality, BNP Paribas leverages energy sobriety, energy efficiency, a portfolio of wind and solar projects of 1.3 GW, backed up ducer, in a corporate power purchase agreement securing
low-carbon energies (primarily renewable) and sequestration of residual emissions. To offer products and services on each of these by batteries to provide an uninterrupted energy supply. It power supply for green and renewable hydrogen. Under a
levers, the Group mobilises all its expertise and the strength of its diversified and integrated model, including three operational is the most significant financing for a round-the-clock re- long-term contract deal, Kallista Energy will sell wind-gene-
divisions (Corporate & Institutional Banking, Commercial, Personal Banking & Services, Investment & Protection Services) with newable energy project in India. The energy produced will rated electricity to Lhyfe, one of the world’s pioneers in the
specialized businesses. be sold to the Solar Energy Corporation of India (SECI). production of green and renewable hydrogen. For Lhyfe, this
BNP Paribas played the role of lead arranger and hedge bank Corporate Power Purchasing Agreement secures the power
in this transaction. Hybrid projects of this nature, combining supply needed for its future green hydrogen production
wind, solar and energy storage, make it possible to optimise sites, thus consolidating its sustained growth. Kallista will
land resources and grid infrastructure, while generating a be able to repower a wind park through financing co-lead by
reliable electricity supply day and night. BNP Paribas and SaarLB.
BNP Paribas was coordinating lead arranger and bookrunner In Poland, BNP Paribas was a major player in the Baltic Power
for a USD 2.5 billion financing to support renewable ener- project led by Orlen and Northland Power. A loan of more than
gy generation projects from AES Corporation, an American EUR 4.4 billion will enable the construction of the first
company specialised in the energy sector. This credit facility offshore wind farm in Polish waters. It comprises 76 wind
will finance more than 3 GW of new clean energy construc- turbines that will provide renewable energy to more than 1.5
tion (solar, wind and energy storage) in the United States million households from 2026. This was the largest offshore
over a 12-month period. wind project in Europe in 2023.
BNP Paribas supports the sustainable transition of the agriculture sector in many ways across Europe. For instance in Italy,
BNL has worked out a new credit policy aiming to facilitate the financing of the conversion of biogas to biomethane plants.
This initiative from BNL, that followed a decree from the Italian Ministry for the Ecological Transition issued in September 2022,
should allow the acceleration of the conversion of some of the 2.000 operating biogas plants in Italy, in order to produce sustai-
nable fuel for cars and trucks.
FOCUS | The Low-Carbon Transition Group mobility and industry sectors. In addition to renewable
energy and the battery sector, this platform is particularly
In 2021, BNP Paribas created the Low-Carbon Transition attentive to future technology projects, specifically green
Group, a strong platform made up of 200 bankers at end- hydrogen.
2023 (with a target of 250 specialized bankers by end-2025) In addition, the Low-Carbon Transition for SMEs & MidCaps
dedicated to supporting international clients, companies and initiative supports SMEs and mid-sized companies in the
institutional investors in accelerating their transition to a transition to net zero emissions in the Group’s five main
sustainable and low-carbon economy. A continuum of banking Domestic Markets (France, Belgium, Italy, Luxembourg and
and non-banking solutions is therefore provided for the Poland) through dedicated tools, advisory and financing
decarbonisation of the economy, and particularly the energy, offers.
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DEVELOPING LOW-CARBON MOBILITY FOSTERING ENERGY EFFICIENCY SUPPORTING ENERGY EFFICIENCY HOME ACQUISI-
TIONS AND RENOVATIONS
BNP Paribas is helping accelerate the development of the Arval and BNP Paribas Leasing Solutions announced a new Heidelberg Materials launched inaugural EUR The energy footprint of housing is a major issue in the ecologi-
battery sector in Europe, playing a key role in financing large offering for both companies and individuals across Europe 750 million Sustainability-Linked Bond, for which cal transition both for customers and the bank. Across its Eu-
projects. that tackles a key barrier to electric vehicle adoption: BNP Paribas acted as joint bookrunner. The 9-year ropean markets, BNP Paribas is accelerating and expanding
BNP Paribas acted as joint sustainability structuring convenient and affordable charging points at home and in SLB has a coupon rate linked to the achievement of the support brought to individual customers. The Group offers
coordinator during the successful placement of the first the workplace. At Arval, the package includes leasing an two key performance indicators, namely to reduce dedicated financing and beyond banking solutions to help in-
EUR 1.25 billion green bond for Stellantis, whose funds electric vehicle for companies or individuals, and charging specific net CO2 emissions to 500 kg CO2 per tonne crease comfort, reduce energy spending while decarbonizing
will be mainly dedicated to the design, development station installation, maintenance, and even removal and of cementitious material by 2026, and to 400 kg CO2 the residential real estate portfolio. The solutions launched by
and manufacture of 100% electric vehicles and electric re-use or recycling if needed. For corporate clients, optio- per tonne by 2030. At Group level, Heidelberg Ma- CPBF in France, BNP Paribas Fortis in Belgium and BNL in Italy
vehicles fuel cells. nal employee home charging reimbursement adds further terials aims to reach net zero carbon emissions by are detailed in the residential real estate section of the report
value. Corporate fleet managers will be able to use “Lea- 2050 at the latest.
AESC (Automotive Energy Supply Corporation), the wor- (See Section IV. Part 1. Net zero alignment update of credit
sing Solutions Charge & Lease” offer to roll-out and finance
ld’s leading Japanese company in the design and produc- portfolio).
a charging infrastructure package for their companies with
tion of batteries, was financed for an amount of more
various power levels, electric infrastructure, civil works,
than EUR 800 million for the planned construction of a BNP Paribas Fortis acted as co-sustainability coor-
signage, and installation support.
gigafactory in France. BNP Paribas acted as mandated dinator when negotiating a sustainability-linked BNP Paribas Polska Bank signed an agreement for up to EUR
lead arranger. During the first phase of this large-scale loan of EUR 400 million for Renewi, a waste recy- 100 million to support energy efficiency projects in Poland
project, it is expected that 9 GWh of batteries will power In France, to meet the expansion of bicycle use, cling and recovery company. The interest margin on with the European Investment Bank. Moreover, the EIB has
200,000 electric vehicles produced each year from 2025 BNP Paribas Personal Finance launched a new long- the loan will depend on whether Renewi achieves also signed with BNP Paribas Bank Polska a cooperation
by the manufacturer Renault. term rental offer for electric bicycles. The service is the objectives it has set itself, namely, to recycle agreement under the European Local Energy Assistance Pro-
provided as a monthly subscription, with different cost 75% of its waste by 2025 and to reduce its scopes 1 gram, providing to housing associations with technical assis-
Northvolt raised USD 5 billion for expansion of Europe's
levels depending on the bike, the options chosen and and 2 carbon emissions. tance and energy audits which are necessary in the phase of
first circular gigafactory. BNP Paribas acted as Exclusive
the length of the contract. Users can use a high-qua- the preparation of the investment projects.
Senior Debt Advisor and Tier 1 Senior Mandated Lead
lity bike for a period of 24 or 36 months, which is cove-
Arranger. This deal represents the largest non-recourse
red by insurance (breakage, theft, etc.) and serviced an-
green financing for a battery cell gigafactory in Europe.
nually by a professional. Corporate have access as well CPBF (Commercial & Personal Banking in France)
The loan will facilitate the expansion of Northvolt Ett,
to Arval bike leasing offer for their employees, a long financed a foundry sand regeneration installation BGL BNP Paribas customers, beside benefiting from prefe-
Europe's first homegrown gigafactory, as well as the rea-
term rental solution of e-bikes, available in 14 coun- project for an amount of EUR 3.3 million, an inno- rential rates to buy a home with registered efficient Energy
lisation of Northvolt's ambitious plans for battery recy-
tries, contributing to diversifying mobility means towards vative project enabling La Fonte Ardennaise, a major Performance Certificates (EPC) label (or equivalent), are also
cling. The facility recovers battery-grade metals with a
low-carbon practice both for commuting and professional player in the foundry industry worldwide, to recycle incentivised to carry out energy renovations when buying a
carbon footprint that is 70% lower than mined raw mate-
journeys. 90% of black moulding sand, and thus save natural property, and supported by renovation experts like Actif, pro-
rials, thereby enabling a fully integrated, circular battery
resources, stop the landfill of sand waste and re- viding advice on solutions to improve the energy quality and
production setup that has not previously existed outside
duce CO2 emissions by 20,000 tonnes per year. to optimize the energy performance certificates of their home.
of Asia.
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FOCUS | Investing in climate opportunities and BNP Paribas Asset Management updated it Global Initiatives and stewardship operates. Its commitments focus on reducing the emissions
supporting the energy transition Sustainability Strategy in 2023: it will continue to focus from its own operations but also those from products built,
BNP Paribas Asset Management has a proactive approach
on Energy transition, healthy Ecosystems, and greater renovated and managed by its business lines, as well as
towards issuers and engage individually, as well as
While the transition to a low-carbon economy creates Equality in our societies – its 3Es. It published its own maximizing the use and limiting the risk of building
collaboratively with other institutional investors with
risks, it also generates significant opportunities, which climate reporting for its 2023 activities detailing the obsolescence, supporting and facilitating emission
aligned goals on climate topics. For example, it co-led
forward-looking investors may capture with the right asset manager’s commitments and building on its Net reductions with stakeholders, and storing and offsetting
engagement with 10 companies in Europe, the U.S. and Asia
investment tools. Zero Roadmap8. BNP Paribas Asset Management aims at residual emissions. On a European scale, its Property
through the Climate Action 100+ Initiative in 2023. Both
reducing the carbon footprint of its investment portfolios Management activity has structured an offer to lead
BNP Paribas Asset Management and BNP Paribas Cardif
BNP Paribas Asset Management for in-scope holdings from a 31 December 2019 baseline existing real estate towards net zero, with a range of
are members of this investor-led initiative that collectively
BNP Paribas Asset Management has a long history of (91.72 tCO2/million EUR invested) by 30% in 2025 and solutions including energy and zero carbon trajectory,
works to ensure that the largest corporate GHG emitters
helping its clients investing in the energy transition, since 50% in 2030. It also aims to align its corporate management of actions to achieve net zero, audit to develop
take the necessary action on climate change.
its first climate focused strategy launched in 2002. It has investments (equity and fixed income) with carbon renewable energies in self-consumption and the integration
neutrality. It targets 60% investments in companies that In addition, BNP Paribas Asset Management worked with a of soft mobility.
since brough to market a range of climate-focus products.
are achieving, aligned, or aligning to net zero9 by 2030 group of institutional investors for nearly two years to
It ranks among the largest ESG passive managers in Europe In 2023, BNP Paribas Real Estate signed a new partnership
and 100% by 2040. This will enable BNP Paribas Asset launch Nature Action 100 (NA100). After being "soft
which reflects its long history in this class, starting with with Materrup that offers clean cement made from
Management to achieve 100% net zero alignment of its launched" in Montreal at the end of 2022, in tandem with
the first low-carbon ETF in 2008. As of 31 December 2023, uncalcined clay, a highly abundant, local raw material
in-scope assets under management by 2050. COP15 of the Convention on Biological Diversity, the
it manages EUR 15.6 billion in Paris-Aligned Benchmarks derived from waste. This product allows to halve the
initiative was officially launch in 2023.
and Climate Transition Benchmarks passive strategies. In carbon footprint of construction sites. It is working with
BNP Paribas Cardif
2023, it created a new private assets business unit to bring BNP Paribas Asset Management opposes management Materrup on five pilot projects in Lyon and Bordeaux that
together its range of activities in this area and launched As part of its net zero commitments, BNP Paribas Cardif is resolutions on the approval of discharge of the board, represent 81,800 m² of floor space, or 700 dwellings.
the Climate Impact Infrastructure Debt fund. It allows reducing the carbon footprint of its investments. Its goal is board reelections or financial statements (depending on
BNP Paribas Real Estate also signed a partnership with
clients to invest in renewable energy, clean mobility, and to decrease the carbon footprint of its directly-held equities the market) at companies that do not properly report on
iQspot, a player in energy efficiency that collects and
circular economy, including new sectors such as batteries, and corporate bonds by at least 23% between end-2020 their carbon footprint (scope 1, 2, and 3 when appropriate)
analyses all of the buildings’ energy consumption data, and
hydrogen, and carbon capture. and end-2024. It also aims at reducing the carbon intensity or their climate lobbying activities, nor communicate or
allows 16% of energy savings without any renovation.
of directly owned office properties by at least 12% between constructively engage about their climate strategy. In
In addition, to meet the needs of investors who are
2020 and 2030 (-47% achieved between 2011 and 2020), addition, it expects companies identified as the world’s BNP Paribas Real Estate Investment Management (REIM)
increasing their allocations to sustainable private
and the emission intensity of electricity producers in which largest corporate GHG emitters to publicly announce their launched at the end of 2020 the European Impact Property
investment strategies, BNP Paribas Asset Management
it invests to less than 125g CO2/kWh by the end of 2024. ambition to achieve net zero GHG emissions by 2050 or Fund (EIPF). It is the first European institutional real estate
decided to broaden its private markets investment platform
sooner. It results in a significant opposition vote at general fund that aims to meet the environmental objectives set
by acquiring leading Danish natural resources specialist In addition, BNP Paribas Cardif has committed to allocate
meetings for climate-related considerations. In 2023, it out by the Paris Agreement. In late 2023, the fund has
International Woodland Company (IWC). This will allow at least EUR 800 million annually between now and 2025
opposed 1,080 resolutions at 200 companies based on the already acquired 10 assets through Europe and begun
clients to invest in sustainable forestry, agriculture, and to investments that contribute to the energy transition and
climate-related expectations. It also supports shareholder deploying ambitious investments plan for improving their
natural ecosystems, as well as carbon credits and initiatives with an environmental theme. This commitment
proposals when they align with its ESG expectations. In climate performance.
conservation projects. encompasses investments in sectors that involve
2023, it supported 85% of shareholder resolutions related
environmental protection, including the energy transition,
Early in 2024, BNP Paribas Asset Management brought to to climate change and it opposed 55% of say-on-climate BNP Paribas Wealth Management
energy efficiency, waste recycling and the preservation of
market a new equity strategy: the Global Net Zero proposals that were within its scope, reflecting proposals
biodiversity. In 2023, BNP Paribas Cardif allocated nearly BNP Paribas Wealth Management is mobilized to offer
Transition strategy, where it applies the NZ:AAA framework that did not meet its expectations.
EUR 1.1 billion in investments that contribute to the energy climate-related investment solutions by selecting
with a just transition lens focusing on engagement in order
transition and positive impact on the environment, notably In 2023, BNP Paribas Cardif voted in favour of two climate investment opportunities focused on climate, low-carbon,
to source companies within the MSCI ACWI (All Country
through financing via green bonds and investing in funds resolutions such as “say on climate”. To choose how to net zero, etc. and by incorporating clients’ sustainability
World Index). The strategy includes a charity class fund,
such as the Climate Impact Infrastructure Debt fund express its votes, BNP Paribas Cardif considers GHG preferences in their investment advice activity and portfolio
where it donates part of the management fee to the charity
launched by BNP Paribas Asset Management in 2023. reduction objectives, the related action plans, and the management service.
Electriciens sans frontières, that builds small scale
established governance to deal with climate issues. Since 2008, any client may also benefit from a free bespoke
renewable energy projects in communities predominantly Through its C. Entrepreneurs fund (along with Cathay
located in the Global South. Its goal is to continue to Innovation), BNP Paribas Cardif invested in Beem Energy, a philanthropy advisory service. One out of four clients is
BNP Paribas Real Estate
increase its climate and environmentally theme French startup promoting the adoption of solar self- requesting advice to preserve biodiversity, and focus on
investments solutions while embedding climate and net consumption through simple solutions to better understand, BNP Paribas Real Estate has taken 10 commitments10 venture philanthropy for innovative green tech
zero considerations across their range of investment control and save the energy. The company has the ambition towards a low-carbon future, aiming to reduce the direct (decarbonation, green coal, carbon capture solutions, etc.).
strategies. to equip over 500,000 homes by 2030 and expand in emissions related to its business and the indirect emissions
Europe, particularly in Germany, Italy and the Netherlands. related to the buildings it constructs, manages and
8
https://docfinder.bnpparibas-am.com/api/files/E6A84FBC-4DF0-4506-92A7-721F19394C99 Targets initiative (SBTi), Climate Action 100+ and Carbon Disclosure Project (CDP). Further
9
BNP Paribas Asset Management uses a proprietary framework to measure the alignment details on this frameowrk are available in BNP Paribas Asset Management's net zero 10
https://inspire.realestate.bnpparibas/en/commitments/climate-change/
of its investments in corporates. This framework is largely inspired by the Paris Aligned roadmap available here: https://docfinder.bnpparibas-am.com/api/files/F5EE3377-26CE-
Investment Initiative (PAII) Net Zero Investment Framework. This triple-A (NZ: AAA) 4DFD-B770-DBD29323D78B.
framework is based on various sources: Transition Pathway Initiative (TPI), Science Based
22 23
II - GOVERNANCE AND IMPLEMENTATION: A GROWING MOBILISATION TO ACCELERATE THE ENERGY TRANSITION
III
FOCUS | BNP Paribas invests to support innovation The Group also supports start-ups by partnering with
for the ecological transition them on projects with high added value. TEB, a subsidiary
of the Group in Türkiye, has joined forces with the
BNP Paribas has been supporting innovation in the areas of German start-up Plan A to calculate CO2 emissions for its
ecological transition by committing a total of EUR 250 clients in the Turkish textile and automotive sectors. In
million of equity since 2016 to support start-ups. At the end Poland, BNP Paribas Bank Polska invested in the start-
of 2023, through its Ecological Transition Capital investment up Envirly to offer their solution to the bank’s MidCap
line, BNP Paribas had already invested EUR 87.2 million in
12 innovative companies, including CarbonWorks in France
customers in order to calculate their CO2 emissions.
Finally, BNP Paribas advised ChargePoly, a specialist in RISK MANAGEMENT
(CO2 capture and recovery using microalgae) and Protix in ultrafast charging solutions for electric vehicles, on its
the Netherlands (insect factory for animal feed), and in raising of EUR 15 million in equity.
eight funds, including Shift4Good, Clay Capital and Seaya
In 2023, the Group continued to deploy its impact
Andromeda.
investments, via its own budget of EUR 200 million or its
Within this same investment line, the SFDR Article 9 fund funds on behalf of third parties, by favouring direct equity
BNP Paribas Solar Impulse Venture, to which BNP Paribas investments in corporate clients with a strong social and/
committed EUR 75 million, completed a closing of EUR or environmental impact. 16 new investments (excluding
131.2 million at the end of 2023. In 2023, this fund invested reinvestments) were made for a total of EUR 56 million,
in Hello Watt, which helps individuals reduce their carbon including Ecov, a shared mobility operator in areas where
footprint through the energy renovation of their homes. public transport is limited or absent, to promote mobility
that is accessible to as many people as possible while
avoiding CO2 emissions thanks to carpooling lines.
24
III - RISK MANAGEMENT
Given the current lack of stability of the models, the data These figures are not comparable with publications from
gaps and the guidelines uncertainty, the Bank has chosen to other banks that have taken other disclosure options and
Despite steady progress made in developing methodologies for quantitative analysis of ESG risk factors and related impacts on tra- apply the same methodology as the previous year in using are published for information only. Those figures are a first
ditional financial risks, there are still limitations, including on the underlying data, which require cautiousness in interpreting the the physical risk scenarios of the European Central Bank 2022 attempt to flag exposures potentially sensitive to physical risk
information presented herein. Thus, tables and graphs presented in this section can only be assessed on the date of publication of climate stress test for this exercise. The results of the flood, events and should not be understood as direct or integrated
this document and must be interpreted mindful of the uncertainties related to ESG methodologies, projections and data used. heat wave and drought scenarios of the ECB’s 2022 climate risks15. For further information about the recent and on-going
stress test have been adjusted to reflect the materiality of development to assess physical climate risks please see Part
chronic physical risk factors over the estimated duration of III. Section 2. How climate risks are identified, measured and
credit portfolios, by only retaining exposures to non-financial monitored.
1.1 BNP Paribas reported its exposures towards sectors that highly companies to match with the model expected by the EBA.
Exposures towards sectors that highly contribute to climate change at end-December 2023 H - Transportation and storage
L - Real estate activities
A - Agriculture, forestry and fishing Exposures to other sectors (NACE codes I-K & M-U)
11
The information disclosed in this part of the report is detailed in the section of Pillar 14
As per Regulation (EU) 2020/1818, companies active in fossil fuel are those that derive 15
More detail are published in the chapter 5.11 of the 2023 URD.
3 related to ESG risk factors (see. BNP Paribas’ 2023 Universal Registration Document revenues from exploration, mining, extraction, production, processing, storage, refining or
(URD), chapter 5.11). distribution, including transportation, storage and trade, of fossil fuels with the following
12
In accordance with Article 12 (1) (d) to (g) and Article 12 (2) of Regulation (EU) 2020/1818. thresholds 1% for coal, 10% for oil, 50% for gas.
13
As per the EBA's definition. This amount integrates the whole value chain's dependency
from the fossil fuel sector, from upstream production to transportation or trading.
26 27
III - RISK MANAGEMENT
Materiality assessment
Risk monitoring
28 29
III - RISK MANAGEMENT
2.2 Identifying the climate-related risk events The question of the transmission channels
The connections between climate risk drivers and the materi- created a first version of an ESG transmission channels taxon-
alization of financial or non-financial risk types into severe but omy and integrated it into Risk ID process methodology and IT
plausible risk events correspond to the transmission channels. application.
THE FUNDAMENTALS OF RISK ID
Understanding and standardizing those transmission channels The figure below presents the climate-related transmission
BNP Paribas’ risk identification process (Risk ID) is an all-risk forward-looking, annual & continuous comprehensive approach is thus a key step to enhance the identification process linked channels that have been embedded in the identification of cli-
to identify and assess, in a harmonized manner, the risks that the Group is or might be exposed to. It leads to producing and to climate risk drivers. Consequently, in 2023, BNP Paribas has mate-related scenarios.
maintaining BNP Paribas’ Risk Inventory, i.e. a set of "severe but plausible" elementary scenarios ("risk events") corresponding to
the way the risk types the Group is exposed to could materialize. All risk events are structured according to the same triplet-based
approach.
Risk materialization
Transition due to climate
1 Any risk event (i.e. elementary scenario, for example: a riverine physical Impact of climate change), on the basis of BNP Paribas’ Social, health & legal
change risk drivers Supply chain disruption Operational risks - Model error
flood in Europe which increases the cost of risk as damages and risk driver taxonomy.
Transition to a low-carbon Changes in expectations, Lower production Operational risks - Compliance
COMBINAtION
higher insurance prices cause a valuation shock for real estate
3 The materiality of the risk event must be assessed using a pattern economy to mitigate climate habits or behaviours
properties in high flooded areas) must be described and assigned Lower productivity Operational risks - Information
that relies, mainly, on a tri-dimensional severity assessment / change - policy changes Damage to the reputation
to one of the risk types of BNP Paribas’ risk type taxonomy. Impact on wealth and/or Communication & Technologie
frequency assessment / imminence assessment framework. The
Transition to a low-carbon Dispute, claims, legal solvency (ICT)
2 The risk driver(s) that favour, trigger and/or aggravate the risk materiality of the risk drivers underlying the risk event is inferred
economy to mitigate climate proceeds Operational risks – Execution
event must be identified (for the flood example here: acute from the materiality of the risk event. Others
change - technological Morbidity (e.g. diseases, risks
changes pandemics) & mortality ESG-related technologi-
Operational risks - Others
Transition to a low-carbon cal change
Social unrest (frauds, HR, legal, third-party,
economy to mitigate climate Availability & costs of risk etc.)
Migration of populations
change - behavioural changes transfer to insurance &
Corporate structure risks
HOW ARE CLIMATE CHANGE-RELATED DIMENSIONS INCLUDED IN BNP PARIBAS’ RISK IDENTIFICATION PROCESS? Physical & financial assets re-insurance
Governance risk drivers Regulatory risks
Physical asset damage /
Inadequate governance Insurance underwriting risks
In coherence with the European Banking Authority’s (EBA) and and/or aggravate the materialization of, virtually, any risk type. regarding management of
destruction
the European Central Bank’s (ECB) positions16, BNP Paribas’ Consequently, out of the 115 risk drivers in BNP Paribas’ risk environmental & social risks Increased volatility or shift in
Risk ID process covers climate change-related risk dimensions driver taxonomy used for Risk ID purpose, 13 risk drivers are prices or values
Liability consequences
through a set of risk drivers and not via stand-alone risk types, associated to ESG concerns, among which seven are totally or Lower financial asset perfor-
ESG related liability conse- mance
on the grounds that climate risk drivers can favor, trigger partially climate change-related (see the table here under).
quences
Stranded assets or workers
Climate change-related risk drivers, extracted from the BNP Paribas’ risk driver taxonomy
DRIVER CHANGE that correspond to the way the driver concurs to the materialization of the risk event have to be identified.
Environmental, Physical risk drivers Acute physical impact of climate change Yes
Social and related to climate
Governance drivers change Chronic physical impact of climate change Yes
Transition risk drivers Transition to a low-carbon economy to mitigate climate change - policy changes Yes
related to climate
change Transition to a low-carbon economy to mitigate climate change -technological changes Yes
Governance risk drivers Inadequate governance regarding management of environmental & social risks Partial
30 31
III - RISK MANAGEMENT
Climate-related information extracted from BNP Paribas 2023 risk inventory ESG transmission channels relate to the way climate-related risk drivers could ultimately result in direct or indirect impacts the
Leveraging on the 2023 Risk Inventory, analyses have been performed to assess the materiality of climate risk drivers on the Group.
different risk types. Based on 2023 Risk Inventory, when isolating the risk events that are climate-related, it is possible to extract this infographics
that presents the relationship (in terms of materiality), between climate-related risk drivers and the transmission channels that
The Sankey diagram below illustrates the materiality relationship between the seven risk drivers totally or partially associated
characterize the way these drivers could lead to negative consequences.
to climate change and the risk types. Their materialisation is totally or partially explained by climate change-related risk
drivers. The thicker the link, the stronger the relation between risk driver and risk type (expressed in materiality). Climate related ESG transmission
risk drivers channels
Last, the materiality relationship between ESG transmissions channels and the risk type categories of the most aggregated level of
the Group risk type taxonomy, for the ensemble of climate-related risk events of 2023 Risk Inventory, is displayed in the following
diagram.
And when deepening the analysis at a more granular level, it appears that, for some risk types, the fraction of their overall materiality
explained by climate-related risk drivers is significant: ESG transmission Major risk type
channels categories
Carbon price or carbon tax (3.0%)
Energy performance / EPCs (2.0%)
0% 100% New ESG-related regulations (4.0%)
Business risk Sanctions & fines (5.7%) (47.8%) Business & Strategic risks
32 33
III - RISK MANAGEMENT
2.3 Assessing potential impacts of climate risks through climate scenario analyses and FRANCE 25%
43.6% Others
18.3% Portofolio secured by real estate
Over the past few years, BNP Paribas has built a robust related risks are fully integrated. As such, the Group’s Internal 16.2% Real-estate activities and construction
platform for stress testing and financial simulations covering Capital Adequacy Assessment Process (ICAAP) incorporates 11.3% Other Manufacturing
all risk types and business lines. The Group has also developed climate-related risks analysis. The exercises carried out so far 18.3% 16.2% 3.8% Power generation and supply 18.3% 16.2%
capabilities to assess the potential impact of climate scenarios show relatively limited impacts at Group level for scenarios 3.6% Transportation
on the credit quality of corporate clients and the geolocation of where the transition is successfully implemented, and the 1.4% Mining and quarrying
3.8% 3.6% 3.8% 3.6%
real estate to assess the impact of physical risk events (such collective net zero objective is reached by 2050. Under these 0.7% Agriculture
43.6% 11.3% 1.4% 0.6% Steel and Cement 43.6% 11.3%
as riverine flood). Exercises based on scenarios have increased scenarios, physical risk impacts also have limited financial 0.7% 0.6% 0.5%
1.4% 0.7% 0.6% 0.5%
in number, diversity, and sophistication. consequences for the Bank, even on a relatively long-term basis. 0.5% Waste collection and sewerage
They do, however, allow for the identification of exposures in 0.1% Coke and petroleum
In 2020-2021, BNP Paribas took part in the pilot program
some sectors and countries that would face higher risk under
conducted by the French ACPR (Prudential Supervision and
these scenarios. BELGIUM 13%
Resolution Authority), which applied “shocks”, taken from Below 2°C Delayed transition
different NGFS (Network for Greening the Financial System) In 2023 BNP Paribas has tested its corporate portfolio against
climate risks scenarios, to the risk parameters. The objective three transition scenarios: the Integrated Assessment Model 39.5% Portofolio secured by real estate
was to estimate the possible impact of the transition and (IAM), the Regional Model of Investment and Development 29.2% Others
physical risks on bank balance sheets and in terms of expected (REMIND) below 2°C (Orderly scenario) and delayed transition 14.1% Real-estate activities and construction
loss. In early 2022, BNP Paribas participated in a European (Disorderly scenario), and current policies scenarios for which 9.1% Other Manufacturing
exercise supervised by the ECB. the NGFS has provided scenario-conditional pathways of both 3.6% Transportation
macro-economic and climate variables in late 2022. 1.3% Steel and Cement
In 2023, BNP Paribas contributed to the EBA Fit-for-55 Climate 29.2% 14.1% 1.29% Power generation and supply 29.2% 14.1%
Stress Test by providing specific climate data on the clients. The projection of the Cost of Risk (CoR) until 2050 is performed
1.2% Agriculture
The Group has also developed internal simulations both on with the Bank’s internal modelling framework. First, the latter 1.3% 1.29% 1.3% 1.29%
0.7% Waste collection and sewerage
transition and physical risks that contribute to its capital encompasses a dynamic balance sheet module that enables to 39.5% 9.1% 3.6% 1.2% 0.7%
0.1% Mining and quarrying
39.5% 9.1% 3.6% 1.2% 0.7%
adequacy assessment. It is worth noting that some stress reflect sectoral reallocation of the Bank’s unsecured portfolio
tests use the current exposures of the Bank without taking into but also EPC mix change on the secured by real-estate
account any future change or adaptation, while others allow portfolio. Moreover, the framework leverages on an in-house ITALY 11%
the use of a dynamic balance sheet approach, reflecting both solution that generates credit rating change at client-level in Below 2°C Delayed transition
the public commitments taken by the institutions and the order to account for credit worthiness evolution in adequacy
transition impacts on the banking books. with the scenario. 38.1% Others
25.7% Other Manufacturing
Climate scenario analysis is an integral part of the Group’s risk
8.8% Portofolio secured by real estate
management and financial steering system, in which climate-
7.7% Power generation and supply
25.7% 8.8% 7.6% Transportation 25.7% 8.8%
5.1% Real-estate activities and construction
2.5% Steel and Cement
5.1% 2.5% 2.2% Mining and quarrying 5.1% 2.5%
defined in the Statistical Classification of Economic Activities in size of the impact as follows: 9.1% Power generation and supply
7.6% Real-estate activities and construction
the European Community (NACE codes), is proportional to its
Low impact Slight moderate impact 22.3% 9.1% 6.3% Transportation 22.3% 9.1%
weight in the total exposure to the corresponding geographical
Moderate impact Hight impact 5.1% Portofolio secured by real estate
area.
3.4% Mining and quarrying
5.1% 3.4% 2.3% Steel and Cement
5.1% 3.4%
34 35
III - RISK MANAGEMENT
US 12% 2.4 New tools to further assess and monitor climate risk
Below 2°C Delayed transition
45.2% Others
31.7% Other Manufacturing
BNP Paribas monitors climate-related developments at country and sovereign levels
9.3% Power generation and supply
4.2% Real-estate activities and construction Country risk is an essential component in the assessment of The E dimension results in a combination of nine metrics,
31.7% 3.8% Mining and quarrying
31.7% the creditworthiness of the Group’s counterparties involved in related to acute and/or chronic climate physical risks and
3.4% Transportation cross-border transactions, and sovereign risks are central to to climate transition risks: (1/2) the exposure to natural
1.1% Steel and Cement
4.2% 3.4% the analysis of the risks associated with the Bank’s exposure to catastrophes and to water scarcity, (3/4) the under-water
0.8% Waste collection and sewerage 4.2% 3.8% public and banking counterparties. and above-ground biodiversity risks, (5) the greenhouse
0.6% Coke and petroleum
45.2% 9.3% 3.8% 1.1%
0.8%
45.2% 9.3% 3.4% 1.1% 0.8%
Therefore, country and sovereign climate risks indicators are gases emitted by the economy, (6) the GDP’s dependency to
0.6% 0.6%
becoming central to the Bank’s cross-border activities. The the fossil fuels production industries, and finally (7/8/9) the
Bank has recently built its in-house, proprietary gauge of ESG sensitivity of the economies to three climate risks scenarios
and Climate & Environment (C&E) sovereign risk assessment, designed by NGFS, i.e. the “Fragmented World” scenario, the
based on variables from recognised external sources, “Delayed Transition” scenario, and the “Net Zero emissions”
REST OF THE WORLD 16% scenario. The S and G dimensions are built on more traditional
including the NGFS, and covering more than 180 countries.
Below 2°C Delayed transition country risk analysis factors: the human development, the
As a ranking does not fully capture a sovereign’s ESG profile, the income distribution, the respect of civil rights, the government
31.5% Others transformation of data into metrics relies on the “distance to effectiveness and respect of the rule of law, the gender equality,
18.6% Transportation best performance” method, across a series of ESG dimensions. political stability, the fight against corruption, etc.
16.7% Other Manufacturing A “distance to frontier” score captures the gap between an
9.5% Power generation and supply economy’s performance and a measure of best practices,
18.6% 16.7% 8.0% Mining and quarrying 18.6% 16.7%
either represented by those of the best performing countries
7.7% Real-estate activities and construction or by an ideal target.
3.9% Steel and Cement
7.7% 3.9%
3.3% Coke and petroleum 7.7% 3.9%
0.3% Waste collection and sewerage
31.5% 9.5% 8.0%
3.3%
0.3%
0.26%
0.2% 0.26% Portofolio secured by real estate
31.5% 9.5% 8.0% 3.3% 0.3%
0.26% 0.2%
0,2%
0.2% Agriculture BNP Paribas is progressing towards a vision of the residual physical risk
Following the internalisation of various physical risk models of power generating assets and apply different damage and
over the past few years (including riverine and coastal floods disruption models. Nevertheless, sourcing corporate asset
as well as chronic heat), BNP Paribas has recently added data across all sectors (location, type of assets, size and
THE RESIDENTIAL REAL ESTATE PORTFOLIO has been tested LESSONS LEARNT: Challenges are important for supervisors,
drought and tropical cyclone to the range of hazards analysed strategic importance) has remained a key challenge to expand
against riverine and pluvial flood risks under RCP17 8.5 2085 banks and the academic world regarding the quality of new
internally. The Group has also identified strategic partners for the analysis across the entire portfolio. In this context, it is also
conditions assuming baseline macro-economic conditions data and the development of new modelling approaches.
enhancing the in-house capabilities, with a larger and/or richer worth noting that BNP Paribas has engaged in dialogues with
using external estimations of asset shocks. Additional important work on the definition of coherent and
(e.g. higher-resolution) set of hazards, for example pluvial key clients to benchmark, test and refine the calculations, as
plausible climate stress test scenarios is necessary.
In the Group’s ICAAP, a precise location level is collected (flash flood), hail and wildfire. Analysis is generally performed well as reflect on adaptation measures.
and consequently, much more granular price shocks at the across a number of science-based scenarios, mostly CMIP18
For the purpose of portfolio stress-testing (e.g. ICAAP), more
property-level are conveyed than in the 2022 ECB climate (e.g. SSP126, SSP245, SSP585). Time horizons range from 2030
sophisticated approaches have also been used, typically
stress test with Nomenclature of Territorial Units for Statistics to 2050 and, for some hazards, up to 2100.
catastrophe models relying on large numbers of climate-
3 (NUTS3), taking into account the fact that all properties are
Those physical risks models have been applied, in an conditioned events.
not hit at the same time during a realistic flood event.
exploratory way, to the Group’s residential and commercial
Recognising the fact that physical risks are primarily borne by
real estate portfolios, as well as on its main offices and data
the insurance and reinsurance industry (and in some instances
centres. Regarding the corporate portfolio, BNP Paribas has
public authorities), the next step is to achieve a residual risk
focused its efforts on some key sectors where the required
view, by reflecting insurance coverage and/or public schemes
asset-level data is readily available, allowing the development,
and understanding the way the insurance protection gap will
calibration and application of more precise vulnerability
evolve under future climate scenarios.
functions. For example, in the case of the power sector,
BNP Paribas’ approaches distinguish between different types Please see the illustration on the next page.
18
17
RCP: Representative Concentration Pathway is a greenhouse gas concentration trajectory CMIP Phase 6 (CMIP6) - Coupled Model Intercomparison Project (wcrp-cmip.org).
adopted by the IPCC. Four pathways are used for climate modeling and research (RCP 2.6, 4.5,
6.0 and 8.5 named after a possible range of radiative forcing values in the year 2100).
36 37
III - RISK MANAGEMENT
The first step in assessing physical risk The ESG Assessment tool covers five ESG dimensions including climate and environment
Physical climate risks is to use climate models to identify
(floods, sea level rise, drought, etc.) geographical areas at risk lower end of Answers to preliminary questions trigger specific questions
the pyramid.
GROSS RISK
Climate (E)
Exposure The assets in scope must then be Environment (E)
(asset location) identified, and their location reconciled
with the climate hazards maps. Pollution & Biodiversity
Preliminary
questions to
Vulnerability The vulnerability which is specific to each Human Rights - Workforce
asset characteristic must also be taken determine
(asset type and characteristics)
into account. the activity Social (S)
of the client Human Rights - local Communities and Consumers
RESIDUAL RISK
Lastly, any possible adaptation measures
Adaptation and insurance coverage must be taken into
and insurance account to get a clear view of the risk. Governance & Business Ethics
Governance (G)
coverage
This analysis on these five ESG dimensions provides a global at counterparty, transaction and collateral levels. The global
overview of the ESG profile of the client, which is completed by framework surrounding the credit process has been enhanced,
the controversies analysis for a full evaluation. in particular through the update of the various credit policies,
The qualitative conclusions of the ESG Assessment (including encompassing dedicated and adapted ESG sections (including
controversies analysis) are provided by the Relationship climate) and leveraging on the ESG Assessment outcomes.
Manager and Group CSR if applicable and challenged by RISK Credit risk is expected to be one of the most impacted risks by
3.1 Credit Risk: ESG Assessment, clients' environment and climate performance, review and
challenge during the credit process 3.2 Operational Risk
For corporate clients, BNP Paribas has developed the ESG Assessment. This tool enables a more harmonized, systematic, Regarding the operational risk, leveraging on climate Thanks to these plans, which aim at mitigating these risks,
comprehensive, and formal review of climate topics through the credit chain: from origination to credit granting, monitoring and scenarios, the exposure of BNP Paribas' operations to the BNP Paribas is in a favorable position to react quickly to climate
reporting. different types of physical risks is assessed throughout its and environmental events that could impact its activities.
various locations worldwide. This exercise supports the design On a broader scale, the integration of ESG-related topics in
The ESG Assessment enables to: This specific analysis aims to identify companies for which of business continuity plans that are commensurate with the BNP Paribas operational risk framework continues to ensure
weak ESG performance and risk management could generate local vulnerabilities of the Group’s premises. the identification, assessment and reporting of operational
Verify client compliance with BNP Paribas sector policies,
credit, investment or reputation risks, as well as negative risks potentially driven by climate and environmental risks.
especially with climate-related criteria.
environmental and social impacts.
Assess how prepared the Bank’s corporate clients are to
manage all ESG challenges, including climate-related ones. As of end of 2023, over 3,000 analyses of very large and large
38 39
IV 1 NET ZERO ALIGNMENT UPDATE OF CREDIT PORTFOLIO
ALIGNMENT PROGRESS : BNP Paribas decided to gradually align its loan portfolio with
the objectives of the Paris Agreement. In 2021, the Group
targets are set for 2030, which is considered as an appropriate
time horizon taking into account the respective industries’
committed to setting intermediary alignment targets for the decarbonisation pathways and underlying challenges. As
MONITORING THE ACCELERATION most carbon-intensive sectors. To date, it has published targets
for six sectors - Oil and Gas, Power generation, Automotive,
the Group further accelerates its pivot away from financing
fossil fuels and towards financing low-carbon energies, it is
Methodological choices
BNP Paribas' review of highly emitting sectors focuses on its loan portfolio, comprised of loans and contingent facilities
such as guarantees or letters of credit, and balance sheet securities. The portfolio is measured in terms of credit exposure,
including drawn and committed undrawn amounts, except for the Oil & Gas financed emissions metric which is computed
using outstanding (drawn) amounts. As part of its objective to finance a carbon-neutral economy by 2050, the Bank aims
to set intermediary targets which are both realistic and ambitious. With the exception of the Oil & Gas sector, for which the
indicators are based on credit exposure and on absolute emissions, the metrics for all sectors are based on physical emission
intensities, supplemented with one operational KPI where relevant.
A methodology has been developed for each sector to assess BNP Paribas’ loan portfolio carbon emissions baselines and
trajectories. This work leverages both our in-house expertise and external market initiatives19, to which the Group actively
contributes, such as the working groups sponsored by the UNEP FI20 or by the Center for Climate-Aligned Finance of the Rocky
Mountain Institute21. These methodological choices comply with the NZBA guidelines, and our targets are benchmarked
against the Net Zero Emissions by 2050 Scenario of the IEA (IEA NZE 2050) or, in certain cases, against other science-based
scenarios when they present distinct advantages in terms of granularity, scope or metrics.
BNP Paribas methodological building blocks for sector’s initial assessment and target setting
Understand the Collect companies Set the rules to Assess available Design the Set ambitious
value chain, 1 financial and 2 define the portfolio 3 science-based 4 5 6
methodology to and realistic
source emissions data exposure in scope scenarios to reach compute the interim targets
of emissions and net zero by 2050 portofolio climate to reach net zero
net zero drivers performance by 2050
BNP Paribas strives to use the best available data and Group to adjust sector baselines and trajectories in future
methodologies for each of the covered sectors. As data reports in accordance with the best practices set by climate
reliability, methodologies and standards continue to improve, science. Methodological evolutions will be monitored on
BNP Paribas expects that regular reassessment will be a regular basis, as well as potential impacts on trajectory
needed to ensure that its models and analyses reflect new intermediary points. See also our disclaimer, p. 70.
developments, key trends and metrics. This might lead the
19
Pegasus Guidelines for the Aviation Sector and Poseidon Principles working group for 20
https://www.unepfi.org/net%20zero-banking/
Shipping. For Steel and Aluminium, the working groups of the Center for Climate Aligned 21
https://climatealignment.org/ and https://rmi.org/
Finance.
41
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
360° SECTOR OVERVIEW - CLIMATE ALIGNMENT DASHBOARD
Emission intensity (gCO2e/RTK)
Decrease in financing to upstream activities (%)
OIL & GAS ~0.8%
Exposure AVIATION ~0.7%
Exposure
2020 956
2022 -15% -12%
Upstream Midstream
2023 -43% -37% Infrastructure
Infrastructure(e.g.
(e.g,airports)
ports)
Oil Exploration & Production Transportation & Storage Refining Distribution Parts Aircraft
Shipbuilding Scrapping <785
2025 -25% -12% Maintenance
manufacturing manufacturing
Oil Oil & Gas Aircraft use 785
Gas Exploration & Production Transportation & Storage Processing & Distribution
Credit risk exposure to upstream activities (€bn)
Emission scope 1 2 3 GHG considered CO2 CH4 N2O
Emission scope 1 2 3 GHG considered CO2 CH4 5.0 -80% 5.3 -30% 2022 2030
4.4 4.6
3.0 3.5 3.7
1.0
Emission scope 1 2 3 GHG considered CO2 Emission scope 1 2 3 GHG considered CO2 CH4 N2O
2020 2023 2025 2022 2030
Secondary production IEA NZE 2025/2030 BENCHMARK (IAI 1.5DS BENCHMARK FOR ALUMINIUM, MPP PRU FOR AVIATION, DNV 1.6° FOR SHIPPING, CRREM V2.02 FOR REAL ESTATE)
0.47
Emission scope 1 2 3 GHG considered CO2 2021 2022 2030
42 43
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
1.2 Alignment progress update on the 2022 and 2023 commitments Attribution factors are computed for upstream and refining
entities using outstanding (drawn) amounts and balance
While replacing the earlier emission intensity metric, which
has become obsolete at portfolio level in the context of
sheet items (equity and debt). The attribution factor is subject the strong acceleration of the Group’s upstream exposure
to a certain degree of inherent volatility related to year-on- reduction targets, BNP Paribas intends to continue to use the
Emission GHG Sector share of total
Scenario Data sources year fluctuations in company values or changing drawing operational emission intensities indicators for its internal
scope considered emissions
patterns. In order to reduce potential distortion associated assessment of individual Oil and Gas companies' performance.
Oil and Gas CO2
- IEA NZE scenario c. 40% of global GHG emissions with company book fluctuations, the attribution factors are
1, 2 & 3 IEA NZE 2050 - Wood Mackenzie (of which c. 15% The Group’s financed emission indicator is subject to certain
CH4 computed using 3-year averages for equity and debt.
- 2006 IPCC Guidelines for scope 1 & 2)22 limitations usual for this kind of metrics (use of estimates,
Sep 30, 2022 The 2030 financed emissions target is set at 8.2 MtCO2e, potential reporting date mismatches, etc.). It has been tailored
2023 Credit exposure 2030 Target Metric representing a 70% reduction compared to a September 2022 to measure the impact of the Group’s upstream exposure
Baseline
c. 0.4% of BNP Paribas’ baseline of 27.3 MtCO2e. The target is benchmarked against reduction strategy and as such may not be comparable
Upstream Oil: 5.0 < 1.0 (-80%) Credit exposure to upstream the IEA NZE scenario which involves a reduction in Oil and with other similar metrics, including the financed emissions
total gross exposure to
Upstream Gas: 5.3 < 3.7 (-30%) Oil and Gas in EUR billion
credit risk Gas emissions of 34% between 2022 and 2030. It also takes reported under Pillar 3 or other reporting requirements.
into account the Group’s objectives in terms of reducing
upstream exposure as well as its targets to reduce the weight The financed emissions indicator formula reads (simplified):
of the fossil fuel financing in its energy production financing
Financed emissions metric = ∑ emissionsc x Drawn amounts c
portfolio to 10% by 2030. As of end of 2023, the metric stood (Equity + Debt)c
at 15.9 MtCO2e, representing a 42% reduction vs. the baseline. c = company
SECTOR DYNAMICS
Over the course of last year, the Oil and Gas sector has The Group has similary committed to decrease its upstream
continued to be impacted by the unstable geopolitical Gas financing (EUR 5.3 billion at the end of September 2022)
situation, resulting in energy supply tensions on a global by more than 30% by 2030.
scale, with strong repercussions in the European market and Overview of Oil and Gas operational metric
The Group also decided to no longer provide any financing
significant volatility in energy prices globally. Note: The Group’s financed
dedicated to the development of new Oil and Gas fields,
Metrics Baseline 2023 Results 2025 Target emissions metric is computed
In Europe, the shortage in Russian natural gas supply in 2022 and regardless of the financing method (project financing, reserve-
using the following data sources:
the resulting energy uncertainty have required the identifica- based lending, FPSO)24, nor to non-diversified upstream Oil
Upstream Oil Credit Exposure Dec 31, 2020 -43% -25% CO2 and CH4 emissions for scopes
tion of alternative supplies such as liquefied natural gas (LNG) players.
1 and 2 (MtCO2e per annum)
imports (with related infrastructure build-up), essentially Upstream Oil and Gas Credit Exposure Dec 31, 2020 -37% -12%
As of end 2023, BNP Paribas had already exceeded its 2025 are taken from Wood Mackenzie
coming from the US and the Middle East. In that context, for each upstream or refining
upstream Oil and Gas and upstream Oil financing reduction
LNG became the base source of natural gas supply into Metrics Baseline 2023 Results 2030 Target counterparty.
targets (respectively -12% and -25%) vs. December 2020, with
Europe reaching 35% of the overall supply in 202223 and in CO2 emissions for scope 3
actual reductions of -37% and -43%. It is also well on track Upstream Oil Credit Exposure Sep 30, 2022 -40% (EUR 3.0bn) -80%
2023. are calculated based on O&G
with its 2030 objectives as can be seen in the table on the volumes extracted by each
In 2023, BNP Paribas has further accelerated its objectives following page. Upstream Gas Credit Exposure Sep 30, 2022 -34% (EUR 3.5bn) -30% counterparty, using data sourced
to reduce the financing to upstream Oil and Gas, while also from Wood Mackenzie to which
pursuing its efforts to support its clients engaged in the tran- Emission factors computed using
sition. Together with the deployment of low carbon financing FINANCED EMISSIONS METRIC Overview of Oil and Gas financed emissions metric IPCC 2006 and IEA data are
applied.
at scale, we expect the security of natural gas supplies to
In order to better measure and monitor the impact of its Equity and Debt = company data
remain high on the European countries’ agenda in years to Metrics Sep 30, 2022 2023 Result 2030 Target
pivot away from financing fossil fuels and towards financing consolidated by BNP Paribas,
come. three-year averages.
low-carbon energies, the Group is introducing a financed 27.3 15.9 8.2
As of 31 December 2023, exposure to upstream Oil and Gas Financed emissions (MtCO2e)
emissions indicator for its Oil and Gas portfolio, together with (baseline) (-42%) (-70%)
represented c. 0.4% and exposure to upstream Oil and Gas an associated 2030 reduction target. The baseline is set at
and refining represented c. 0.8% of BNP Paribas’ total gross 30 September 2022, which is in line with the baseline for BNP Paribas' 2030 target is more ambitious than the IEA NZE scenario which involves a
exposure to credit risk. the Bank’s 2030 upstream Oil and Gas exposure reduction reduction in Oil and Gas emissions of 34% between 2022 and 2030.
targets.
OPERATIONAL METRICS: UPSTREAM OIL AND The financed emissions indicator builds on the PCAF
BNP Paribas partnership with Kayrros
UPSTREAM GAS CREDIT EXPOSURE methodology and is specifically tailored to measure and
monitor the impact of the Group’s exposure reduction
In 2023, BNP Paribas formed a landmark research & development partnership with Kayrros - a global environmental
BNP Paribas first introduced in 2021 and then reinforced in strategy in terms of absolute emissions. It covers scope 1 &
intelligence firm. Kayrros uses artificial intelligence to process satellite images and track global methane emissions in near
2022 a set of 2025 objectives to reduce its credit exposure to 2 emissions for upstream and refining, together with scope
real time. BNP Paribas teams intend to build on these methane tracking technologies to work towards developing more
the upstream Oil and Gas activities. 3 emissions for upstream (end-use combustion). The scope
accurate industry-level methane metrics using different modelling techniques, including geospatial data analytics. The Group
1 & 2 emissions include methane emissions which need to
In January 2023, this ambition was substantially strengthened will leverage Kayrros’ expertise to deepen its understanding of the methane footprint and enhance its engagement with oil
decrease by 75% by 2030 compared to 2020 levels under the
and extended to 2030: BNP Paribas has committed to reduce and gas companies. The project aims to supplement the existing corpus of knowledge on methane emissions quantification
IEA NZE scenario.
its upstream Oil financing to less than EUR 1 billion by 2030, while promoting best practices in data measurement, analysis and reporting. Its aim is to effectively contribute to the toolkit
i.e. an 80% decrease compared to its exposure amount of available to banks to measure their progress towards the methane abatement goals of IPCC (AR6).
EUR 5 billion at the end of September 2022.
22
Source : IEA - https://iea.blob.core.windows.net/assets/2f65984e-73ee-40ba-a4d5- 23
Source : WEO 2023 - https://iea.blob.core.windows.net/assets/86ede39e-4436-42d7-ba2a-
bb2e2c94cecb/EmissionsfromOilandGasOperationinNetZeroTransitions.pdf edf61467e070/WorldEnergyOutlook2023.pdf
24
Floating production storage and offloading.
44 45
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
c. 1.9% of BNP Paribas’ total 2023 Credit exposure 2020 Baseline 2025 Target Metric
208 146 (-30%) gCO2/kWh
gross exposure to credit risk
c. 0.7% of BNP Paribas’ total
183 137 (-25%) gCO2/km WLTP
gross exposure to credit risk
SECTOR DYNAMICS EMISSION INTENSITY METRIC SECTOR DYNAMICS EMISSION INTENSITY METRIC
In 2023, the global demand for electricity grew by 2.2%25 BNP Paribas’ portfolio emission intensity significantly decreased 2023 saw a solid growth in production and sales of light-
The portfolio’s emission intensity decreased by 16 gCO2/km WLTP30
caused by a strong growth in China which more than in 2023 (148 gCO2/kWh) compared to 2022 (179 gCO2/kWh). This duty vehicles, driven by pent-up demand which followed
to reach 151 gCO2/km in 2023. In addition to the increased share
compensated the decrease in the USA and the EU. In the improvement is due to the decrease of coal and gas in the technology supply shortages in the previous year. Much of the growth
of electrified vehicles in our clients’ production, it was driven by
renewable field, capacity additions increased by almost mix, the increase of the Bank’s exposure to clients in the renewable was carried by electrified car sales, which however no-
the continued efforts of the Group’s automotive clients to reduce
50% to nearly 510 gigawatts with a strong acceleration energy field, and the updating of client’s data. ticeably slowed in the later part of the year. A certain
the emissions of their models with combustion engines.
in China. Global CO2 emissions from power generation retrenchment in electric vehicles subsidies in Europe, the
increased by 1% in 2023, mainly due to a rebound in Overview of Power Generation operational metrics and emission global rise of interest rates, and remaining limitations in Overview of Automotive operational metric and emission
coal-fired power generation, especially in China and intensity metric the ‘ease of use’ of battery electric vehicles all played their intensity metric
India, which counterbalanced a reduced hydropower part.
output driven by droughts. 2025
Metrics 2020 2021 2022 2023 As of 31 December 2023, the NZBA Automotive28 exposure 2025
Target Metrics 2020 2021 2022 2023
In 2023, BNP Paribas accelerated its financing role by represented represented c. 0.7% of the Group’s total gross Target
supporting its clients in the renewable energy sector Share of coal (%) 10 8 7 5 <5 exposure to credit risk.
leading to the decarbonisation of the industry. Share of electrified
4 7 14 15 >25
vehicles (%)
As of 31 December 2023, exposure to Power Generation Share of renewables (%) 57 62 60 65 >66
OPERATIONAL METRICS: SHARE OF ELECTRIFIED Emission intensity
represented c. 1.9 % of BNP Paribas’ total gross exposure VEHICLES29 183 176 167 151 <137
(gCO2/km WLTP)
to credit risk.
2025
Metrics 2020 2021 2022 2023 As a result of the above market developments, the share of
Target
electrified vehicles in the powertrain technology mix of the Note: the Group’s emission intensity is calculated using the
OPERATIONAL METRICS: SHARE OF COAL AND
Emission intensity BNP Paribas’ financed automotive manufacturing portfolio following data sources:
SHARE OF RENEWABLES 208 182 179 148 <146
(gCO2/kWh) continued to increase, albeit at a slower pace, reaching • Powertrain technology mix per counterparty (in % of vehicles
The share of coal in the capacity mix of our financed 15% in 2023 compared to 14% in 2022. produced) from S&P Global. The produced fleet is segregated
across five powertrain mixes: Internal Combustion Engine
Power Generation portfolio continued to decrease from
Note: the Group’s emission intensity is calculated using the following (ICE), Hybrid, Plug-in Hybrid (PHEV), Battery Electric Vehicles
7% in 2022 to 5% in 2023, as a direct consequence of the data sources: (BEV) and Fuel-Cell vehicles (FC).
ongoing enforcement of BNP Paribas’ coal policy, which
• Installed capacity per technology per counterparty (in MW) • Emission factors per technology from Asset Impact, focusing
entails to no longer finance companies that use coal sourced from Asset Impact. This data is used to estimate the on tailpipe emissions of new vehicles sold (i.e. excluding
to produce electricity in the EU and OECD countries by portfolio generation capacity mix as well as to compute the current fleet in service) based on average standard CO2
2030, and in the rest of the world by 2040. portfolio emissions intensity. emissions across manufacturer and vehicle type per km
• Latest updated capacity factors per technology & implied emission driven based on the WLTP norm.
The share of renewables26 was up to 65% in 2023
factors per technology sourced from the IEA World Energy Outlook
compared to 60% in 2022. Overall, the share of low- 2023. Capacity factors per technology measure how often an
carbon energies (i.e. renewables and nuclear) also electric generator operates over a specific period, using a ratio
increased from 69% in 2022 to 74% in 202327. (expressed as a percentage) of the actual output to the maximum
possible output over that period.
In the World Energy Outlook report published by the IEA
in 2023, the global coal and the renewable capacities
represented 24% and 31% respectively in 2022.
25
IEA – Electricity 2024 – Analysis and forecast to 2026 and IEA Renewables 2023 – 27
See the detailed elctricity mix by capacity in our 2023 URD p. 656.
Analysis and forecasts to 2028
26
Renewable energy: wind and marine energy, photovoltaic solar energy, concentrated
28
In our methodology defined as light-duty vehicule manufacturing. 30
The Worldwide harmonized Light vehicles Test Procedure (WLTP) is a global standard
solar energy, hydroelectricity, geothermal energy, bioenergy (including biofuels
29
Electrified vehicles refers to a range of technologies that use electricity to propel a for determining the levels of pollutants, CO2 emissions and fuel consumption for light
except for first generation). vehicle including BEV: Battery Electric Vehicle, PHEV: Plug-in Hybrid Electric Vehicle, duty vehicles.
FCV: Fuel Cell Vehicle.
46 47
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
Emission GHG Sector share of total Emission GHG Sector share of total
Scenario Data sources Scenario Data sources
scope considered emissions scope considered emissions
- IEA 1.5 Degree scenario
Steel - IEA NZE scenario Aluminium CO2 IAI 1.5 Degree - Commodities Research 3% of global
1, 2 & 3 - Commodities Research c. 7% of global CO2 1&2
CO2 IEA NZE 2050 PFC31 scenario Unit CO2 emissions
cat. 1 Unit (CRU) emissions
- IEA NZE scenario
- Public client disclosures
2023 Credit exposure 2022 Baseline 2030 Target Metric
2023 Credit exposure 2022 Baseline 2030 Target Metric
0.04% of BNP Paribas' total
6.2 5.6 (-10%) tCO2e/t aluminium
c. 0.3% of BNP Paribas’ total tCO2/t crude steel gross exposure to credit risk
1.6 1.2 (-25%)
gross exposure to credit risk
SECTOR DYNAMICS Overview of steel emission intensity metric SECTOR DYNAMICS Overview of Aluminium emission intensity metric
In 2023, global crude steel production was almost the same In 2023, primary aluminium production increased by 2% at
Metric 2022 2023 2030 Target Metric 2022 2023 2030 Target
as in 2022 reaching 1,891 million tonnes: China’s production 70.6 million metric tonnes, mainly driven by an increase in
was flat due to a weaker demand from the construction China (strong growth in solar modules and electric vehicles) Emission intensity
Emission intensity 6.2 5.8 <5.6
sector while growth in India and Russia compensated capacity 1.6 1.5 <1.2 and in the Gulf Cooperation Council countries while Europe (tCO2e/t of aluminium)
(tCO2/t of crude steel)
reduction in the EU. decreased its production notably due to weak demand and
floating/unhedged power tariffs32.
As of 31 December 2023, the steel sector represented c. 0.3% of
Note: The Group’s emission intensity is estimated using the Note: the Group’s emission intensity is estimated using the
BNP Paribas’ total gross exposure to credit risk. As of 31 December 2023, the aluminium sector represented
following data sources: following data sources:
c. 0.04 % of BNP Paribas’ total gross exposure to credit risk.
• Emission intensity baseline calculated for each furnace • Emission Intensity baseline calculated for each aluminium
based on specific boundaries (raw material preparation smelter sourced from CRU.
EMISSION INTENSITY METRIC
including performed by third party providers for non-fully • 2030 emission intensity: when available most recent
integrated steelmakers, iron making and steel making) EMISSION INTENSITY METRIC
publicly announced emission reduction commitments
BNP Paribas' portfolio emission intensity decreased in 2023 sourced from CRU. otherwise CRU estimates.
(1.5 tCO2/t of crude steel) compared to 2022 (1.6 tCO2/t of • 2030 emission intensity: when available most recent BNP Paribas’ portfolio emission intensity decreased in 2023
crude steel). This improvement is due to the decrease of the publicly announced emission reduction commitments (5.8 tCO2e/t of aluminium) compared to 2022 (6.2 tCO2e/t of
emission intensity of some clients, partly thanks to energy otherwise CRU estimates. aluminium). It is mainly due to clients’ improvements. It
and material efficiency initiatives. BNP Paribas' steel portfolio remains well below the worldwide average (11.5 tCO2e/t
remains below the worldwide average emission intensity of of aluminium in 2022) as the Bank continues to focus its
1.8 tC02/t crude steel and in line with the IEA 2030 target. financing, on average, on clients operating with relatively low
emission intensities.
31
PFC: Perfluorocarbon.
32
Source: International Aluminium Institute.
48 49
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
Emission
scope
GHG
considered
Scenario Data sources
Sector share of total
emissions
1.3 2024 new portfolio alignment approaches and targets
Cement 1 (Gross33) - IEA NZE scenario c. 7% of global CO2
CO2 IEA NZE 2050
&2 - Clients' public disclosures emissions Emission GHG Sector share of
Scenario Data sources
scope considered total emissions
2022 Credit exposure 2021 Baseline 2030 Target Metric Aviation 1 & 3, cat. 3 (airlines) CO2 MPP35 - PACE36 2 to 3%
or 3, cat. 13 (lessors) CH4 Prudent - MPP Prudent scenario of global CO2
c. 0.1% of BNP Paribas' total tCO2 /t cementitious Well-to-Wake N2O scenario - Public client disclosures emissions
0.67 0.51 (-24%)
gross exposure credit risk product
2022
2022 Credit exposure 2030 Target Metric
Baseline
Global cement production declined significantly in 2022, down BNP Paribas’ portfolio. The average emission was further im- SECTOR CONTEXT
5% and driven by China (-11%). China remains the leading proved by the Group increasing its exposure to lower emitting
Aviation connects people, provides access to goods and sectors decarbonise, Aviation’s share in overall emissions is
cement producer, with 51% of global production, where India is clients. Overall this led to a material year-on-year reduction in services and enables trading across geographies. It is therefore expected to be amplified in the future, driven by the continued
increasing its share in global production34. emission intensity of more than 4%. fundamental to the world economy. In 2019, prior to the growth of the sector. At this pace, air transport cumulative
In 2022, major cement players have worked to reduce their pandemic - induced volatility in air traffic, the air transport GHG emissions between 2022 and 2050 could sum up to
Overview of Cement emission intensity metric
carbon intensities by optimising the production parameters sector represented EUR 3.5 trillion (4.1% of the world’s GDP). 47 GtCO2e and exceed the 1.5°C carbon budget of the sector by
(clinker to cement ratio, energy efficiency, cement content). In 2030 The Aviation decarbonisation path starts from a hard to abate a factor of more than two.
Metric 2021 2022
the near future, these elements will remain the main driver Target framework: in 2019 pre-pandemic GHG emissions from the
Numerous stakeholders in the aviation value chain have broadly
of decarbonisation, together with the use of alternative prod- Emission intensity sector contributed to roughly 2 to 3% of global total emissions
committed to net zero by mid-century, with intermediate
ucts for cement. Carbon capture and storage solutions will be (tCO2/t cementitious 0.67 0.64 <0.51 (1.2 GtCO2e).
product) targets, but the path to reaching that goal remains complex.
required to maintain the decarbonisation trend in the longer
The current projections of the International Air Transport Given the capital-intensive nature of the sector and the lack of
term. Some of our clients are now planning first introductions
Association (IATA) estimate that demand for air travel in 2050 readiness of alternative lower emission technologies, achieving
of these technologies by 2030.
Note: The provided data relate to year-end 2022, as BNP Paribas could exceed 10 billion air passenger journeys - more than carbon neutral operations will require time and massive capital
As of 31 December 2022, the cement manufacturing activities relies on clients’ data and public commitments announced doubling 2019 levels - as the global economy continues to investments, initially supporting a wider uptake of Sustainable
in annual reports which became available throughout 2023.
represented c. 0.1% of BNP Paribas total gross exposure to develop in the coming years and a larger share of emerging Aviation Fuels (SAF).
Emission data coverage represents 96% of BNP Paribas’ credit
credit risk. exposure (2021: 90%). economies' population adopt a regular flying mode. As other
APPROACH
BNP Paribas’ portfolio emissions intensity measurement leve- lines and scope 3 category 13 (downstream leased assets) for
rages on the methodology outlined by the Pegasus Guidelines. lessors.
Financial scope Emissions are measured on a well-to-wake basis, which in-
Secured and unsecured exposure (drawn and committed un- cludes the emissions released during combustion, as well as
drawn amounts), encompassing commercial and export credit upstream fuel emissions (which are negative for Sustainable
agency-insured lending. As of 31 December 2022, exposure to Aviation Fuels). All Kyoto Protocol GHGs (including CO2, CH4
the Aviation sector represented c. 0.7% of BNP Paribas total and N2O) are in scope.
gross exposure to credit risk. Value chain
Emission scope BNP Paribas’ portfolio emissions intensity measurement fo-
cuses on the operations of commercial aircraft, whether owned
Scope 1 and scope 3 category 3 (fuel and energy-related ac-
by airlines or lessors, and which represent c. 95% of the total
tivities which are not included in scope 1 or scope 2) for air-
CO2 emissions along the value chain.
33
Scope 1 emissions on a gross basis, i.e. including emissions released by the 34
Source: IEA, Tracking Cement. 35
Mission Possible Partnership.
combustion of alternative fuels – excluding biomass. 36
Platform for Analysing Carbon Emissions.
50 51
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
Metrics By 2030, BNP Paribas targets a reduction of 18% of its Aviation Emission GHG Sector share of
portfolio emission intensity vs. the 2022 baseline, representing Scenario Data sources
Emission intensity defined in grams of CO2e per Revenue Tonne scope considered total emissions
Kilometre (RTK), with RTK a unit of traffic measurement cor- 785 gCO2e/RTK, aligned with MPP PRU scenario projections. - DNV 1.5 Initiative scenarios
Shipping CO2 - IMO Revised 2-3%
responding to one metric tonne of payload carried one kilo- This reduction target is highly dependent on a small number of 1 & 3, cat. 3 - DNV/IMO
CH4 Strategy of global CO2
metre. This metric is used in the Pegasus Guidelines and has Well-to-Wake - Asset Impact
enablers such as operational efficiency, which may be affected N2O - Det Norske Veritas emissions
- Public client disclosures
several advantages: (i) RTKs encompass all types of payload by individual operational strategies from airlines and other
i.e. passengers, belly freight and dedicated cargo traffic, (ii) it stakeholders (e.g. civil aviation authorities), as well as the 2022 Credit exposure 2022 Baseline 2030 Target Metric
reflects airlines efforts to improve emissions intensity through scaling up and availability of SAFs. It does not consider any
load factor optimization, and (iii) it is consistent with SBTi’s Annual Efficiency
carbon offsetting measure and assumes that the share of cargo 0.5% of BNP Paribas' total 5.6 - 6.4
8.3 Ratio (AER) in
guidance for the aviation sector. aircraft, which typically exhibit lower emission metric per gross exposure to credit risk (-32% to -23%)
gCO2e/dwt.nm
Data sources transported weight than passenger aircraft, remains marginal
in BNP Paribas' Aviation portfolio.
BNP Paribas leverages on the data collected directly from SECTOR CONTEXT
clients and through PACE (Platform for Analysing Carbon
Emissions), one of the Pegasus Guidelines qualified third-party DECARBONISATION ENABLERS Representing approximately 80% of global trade by volume, international shipping to reach net zero “by or around” 2050
data provider. seaborne transport is therefore essential to the world eco- (compared to its 2018 initial target of a 50% reduction in GHG
Aviation’s unique requirements, including passenger safety, nomy, including in terms of energy and food security. emissions with respect to 2008 levels). Emissions are now
weight and size constraints, long innovation cycle and the high considered on a full lifecycle (i.e. well-to-wake) basis.
BENCHMARK METHODOLOGY & TARGET SETTING The shipping sector contributes to 2-3%37 of global greenhouse
cost and/or limited scale of key decarbonisation levers depict
gases emissions and is deemed a hard-to-abate sector. At the European authorities have also stepped up their ambitions.
the challenges the sector faces towards more sustainable
BNP Paribas has elected to use the Prudent scenario of the same time, it remains by far the most carbon-efficient mode of From 2025 onwards, the FuelEU Maritime regulation will set
travelling and, ultimately, net zero flying by 2050.
Mission Possible Partnership (the "MPP PRU scenario") as commercial transport today in terms of emissions per distance requirements to reduce the average annual well-to-wake GHG
a benchmark for the decarbonisation of its Aviation lending The decarbonisation of aviation encompasses - beyond travelled. emission intensity of onboard energy used by ships trading in
portfolio. The MPP PRU scenario (i) consists in a 1.5°C-aligned limiting air travel demand - operational efficiency, fleet According to the IEA Stated Policies Scenario (IEA, 2023 WEO), the EU between 2025 and 2050.
trajectory for Aviation, (ii) is based on robust and credible renewal, SAFs and novel aspirational propulsions (hydrogen, without further actions, carbon emissions from the sector are Confronted with the need for a technological and operational
industry-backed assumptions in terms of traffic forecasts battery-electric and hybrid aircraft). Near term solutions rely expected to increase from 855 MtCO2 to 1,098 MtCO2 between shift, the sector already embarked on voluntary decarbonisa-
and gradual technological developments, (iii) differentiates more on enhancing operational efficiency, renewal of fleet and 2022 and 2050, as seaborne trade volume grows by 2.9% per tion efforts by way of operational improvements, such as slow
passenger and dedicated cargo operations, and (iv) is the gradual introduction of sustainable fuels, which are the three year on average over the same period. Regulations, policies, steaming, optimisation of weather/voyage routings, technical
reference benchmark used in the Pegasus Guidelines. levers considered for setting the BNP Paribas aviation portfolio and industry initiatives remain key to achieve sufficient reduc- retrofits (installation of energy saving devices), efficiency gains
2030 target. Longer term enablers (after mid-2030s) include tions in GHG emissions. and the development of nascent alternative propulsion tech-
We have also considered the IEA NZE scenario, which is
wider SAFs offtake and the adoption of electric, hybrid and nologies.
however currently less adapted to the Aviation sector on some In July 2023, the International Maritime Organization (IMO)
hydrogen-powered propulsions that at 2050 horizon will have
key parameters (traffic forecasts, scope, type of emissions revised its GHG strategy and declared an ambition for
the potential to serve regional, short-haul and perhaps some
covered, metrics, granularity).
medium-haul markets. To achieve its 2030 target, BNP Paribas
recognizes that these enablers are not fully in the hands of
BNP Paribas Aviation Emission Intensity
its clients. Several factors are also highly dependent on policy
Infrastructure (e.g,
Infrastructure (e.g. ports)
ports)
Parts Ship
(2022 and 2030, Well-to-Wake gCO2e/RTK) Shipbuilding
Shipbuilding Maintenance / Retrofitting
support and industry collaboration across the value chain – manufacturing Scrapping
including for the future availability and price of SAF. Ship use
BNP Paribas MPP PRU ~95% of absolute CO2 emissions
Emission intensity SCENARIO
(gCO2e/RTK) Better utilization of aircraft (higher load
Parts Recycling
Operational factor), air traffic management, flight and Shipbuilders
Shipbuilding Ship owners & operators
-18% manufacturers actors
956 efficiency ground operations, incremental improve-
785 ments on turbine and aerodynamics.
785
Legend In-scope Out of scope
Fleet Larger share of new generation aircraft in
renewal operations.
APPROACH
Sustainable Aviation Fuels (SAF) having
lower lifecycle emissions than traditio- Financial scope Emissions are measured on a well-to-wake basis, which in-
nal jet-fuel. SAFs are drop-in fuels and Secured and unsecured exposures (drawn and committed un- cludes the emissions released during combustion on board of
2022 2030 2030 Sustainable can be used without changes to aircraft drawn amounts), encompassing commercial and export credit a vessel, mainly for propulsion purposes, as well as upstream
Baseline MPP PRU Benchmark Aviation and airport infrastructure. But they re- agency-insured lending. As of 31 December 2022, exposure to fuel emissions. CO2, CH4 and N2O are included.
2030 Target Fuels (SAF) quire a massive ramp up of production and
the Shipping sector represented c. 0.5% of BNP Paribas total Value chain
need significant quantities of sustainable
gross exposure to credit risk.
feedstock (among others without competi- BNP Paribas’ portfolio emission intensity measure-
At 2022-end, BNP Paribas Aviation portfolio compares
tion with food or feed) and energy. Emission scope ment focuses on cargo vessels once built, delivered
favourably to the global industry average, at 956 gCO2e/RTK.
Scope 1 and scope 3 category 3 (fuel and energy-related ac- and in operations, which represent the vast majority of
This performance can mainly be attributed to the to the larger Novel Introduction of novel propulsion technolo-
tivities which are not included in scope 1 or scope 2) of ship the GHG emissions along the value chain, BNP Paribas’
share of young aircraft in the Bank's global portfolio compared aspirational gies including hybrid, hydrogen and batte-
owners & operators. approach excludes vessels under construction.
to the world average. propulsions ry-electric aircraft.
37
The Fourth IMO GHG Study 2018.
52 53
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
BNP Paribas enablers are not fully in the hands of its clients. Several factors Raw material Construction co. Real Estate investors
DNV 1.6°C
Emission intensity (gCO2e/ are also highly dependent on policy support and industry
TRAJECTORY
dwt.nm) collaboration across the value chain – including for the ramp Stakeholders Processor Developers Owner-Occupiers
up of alternative fuels.
8.3 -32% to -23% Transporters Property dealers Tenants
40
Subject to data and methodology availability. 43
IEA, Tracking Buildings.
41
CRREM : Carbon Risk Real Estate Monitor . 44
Source: World Economic Forum, ‘To create net zero cities, we need to look hard at our older
38
International Maritime Organization Data Collection System. 42
Non-residential direct & indirect emissions, excluding construction. Source: United Nations buildings’, 8 Nov. 2022.
39
Carbon Intensity Indicator. Environment Programme (2024), Global Status Report for Buildings and Construction.
54 55
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
Within the building utilization phase, the scope aligns with level. This granularity allows the Group to take into account DECARBONISATION ENABLERS
the Group’s definition of the real estate sector, which excludes the diverse starting points across building types and countries
owner-occupied real estate. It therefore focuses on emissions and to monitor our clients’ progress by comparing to the rele- As noted, the sector’s transition is heavily reliant on retrofitting
from buildings owned by real estate investors, including their vant decarbonisation curves. The CRREM provides fully aligned the existing building stock. When considering operational
tenants’ emissions, under a whole-building approach. 1.5°C decarbonization pathways for the real estate sector. emissions, this can be achieved through 2 main levers: by
reducing energy consumption and by sourcing cleaner energy.
For secured lines, the emissions are measured at asset pro- While the Bank aims at maintaining a stable benchmark al-
perty level, while for unsecured financing the emissions are lowing to track and compare progress over time, it also antici-
measured at property portfolio level, as disclosed by the Real pates that the portfolio composition may change in the future. Reducing the energy consumption
Estate Trust Investments (REITs). If a material change in the portfolio mix occurs, BNP Paribas through energy efficiency and mana-
Building’s energy
may adjust the benchmark to ensure it remains representa- gement measures (e.g. high quality
Financial scope consumption
tive for the underlying asset types and countries. In addition, isolation, improved systems efficiency,
The Group prioritized its largest markets and portfolios where BNP Paribas aims to improve its data quality and coverage adjusting to consumption patterns).
sufficient data could be obtained: for the sector. This could also result in an adjustment to the
Sourcing low to zero emitting ener-
- Secured financing portfolios of CIB EMEA and Commercial & benchmark.
gies for building operations (e.g. green
Personal Banking in France electricity, bio energy):
- Unsecured-REITs financing portfolio of CIB in EMEA and BNP Paribas’ 2030 commitment for the - At building level, it requires adap-
Commercial & Personal Banking in France and Belgium Commercial Real Estate sector tations to allow for cleaner energy
sourcing (e.g. electrification of hea-
As of December 31, 2022, exposure to the Commercial Real BNP Paribas
CRREM BNP Paribas’ 2030 target on the Commercial Real Energy source & ting). The owner may also be able
Estate sector represented c. 1.4% of BNP Paribas total financing. Emission intensity mix to ensure sourcing of green energy
BENCHMARK V2.02
(kgCO2e/m2) Estate Sector
Metrics from its suppliers.
- At location / country level, it re-
The chosen metric is an emission intensity, defined as kilogram 30.3
28.4 quires decarbonisation of the power
of CO2e per square metre. To come to an aggregated metric, -41% to -31%
generation mix (this lever is howe-
emission intensities are weighted by loan exposures. -55% ver not in the hands of building
16.7 - 19.5
owners).
Data sources 13.5
For the secured portfolio, the Bank has leveraged on collected
Energy Performance Certificates (EPCs) that are directly re- BNP Paribas identified several transition levers that it aims
lated to the collateralized assets. This was complemented by to implement. For instance, Commercial & Personal Banking
information obtained from public databases, e.g. ADEME and 2030 in France will increase its share of financing of green assets
2022 2030 2022
Base des Notaires in France. Where no direct emission inten- (following EU Taxonomy, FrenchRE2020 and/or high scores
Baseline CRREM V2.02 Benchmark
sity was provided on the EPC, energy intensity or labels were under well-established independent sustainable assessment
2030 Target
converted by using national emission factors and appropriate methods). The origination teams across the Bank will include
EPC scales. climate impact as a decision criterion in their business
At end-2022, BNP Paribas’ emission intensity on the covered decisions. With respect to the unsecured financing to REIT
For the unsecured-REITs portfolio, the Bank has mostly leve-
Commercial Real Estate scope was 28.4 kgCO2e/m², which is clients, BNP Paribas will monitor their climate targets and
raged the information disclosed by clients in their annual /
6% below the comparable CRREM benchmark. The portfolio support them in their net zero trajectory.
sustainability reports. When available, market-based informa-
benefits from an exposure to large Real Estate Investors, whose
tion was used.
assets, on average, exhibit a slightly better performance than
Where no specific asset or company data was available, the the 2022 CRREM benchmark.
Bank used additional assumptions by leveraging existing data
BNP Paribas sets an intermediate target for 2030 in the form
on similar assets (considering at least country and building
of a range of 16.7 to 19.5 kgCO2e/m², representing a reduction
type), or on a proxy basis (using ADEME).
range of 41% to 31%.
The availability of the EPC information varies strongly between
This reduction range remains lower than what the CRREM
countries. There is a high dependency on a country’s regula-
V2.02 trajectory would prescribe for 2030. The set target range
tions (including privacy laws) and data infrastructure. As a re-
reflects the current projections by the relevant countries for
sult, in certain markets, the data collection has been limited
their building and energy sectors under existing national
to such an extent that these markets could not be included in
measures45, factoring in a degree of uncertainty as well as an
scope today.
active steering of the Group’s portfolio.
45
Countries’ submissions to the United Nations Framework Convention on Climate Change
under the With Existing Measures (WEM) scenarios, which account for domestic policies
and measures already in place.
56 57
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
46
Subject to data and methodology availability. 48
Carbon Risk Real Estate Monitor 50
CRIF: Centrale Rischi Finanziari.
47
Residential direct and indirect emissions, excluding construction. Source: United Nations 49
ECB Data Portal 2023 Annual figures for residential properties all dwelling types https://
Environment Programme (2024), Global Status Report for Buildings and Construction. data.ecb.europa.eu/data/datasets/RESH/RESH.A.B6._T.N._TR.NPRO.4F0._Z.N._Z
58 59
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
Emission GHG Sector share of total SUSTAINABILITY DRIVERS AND SUPPORT TO THE (v) Breeding and animal welfare: European animal feed is
2023 Credit exposure SECTOR highly dependent on oleo-protein (70% of European proteins
scope considered emissions
are imported, including soy, a main driver of deforestation).
Agriculture CO2,
21% of global GHG <0.4% of BNP Paribas' total gross expo- Holistic approach Breeding and animal welfare cover efforts to mitigate risks
1&2 CH4
emissions sure to credit risk related to soybean import dependence, to preserve and
N2O BNP Paribas’ roadmap considers official transition strategies for
increase animal welfare, and to improve animal feed quality.
the agriculture sector at global, European and national levels,
of which the COP28 agreement (art. 28), Kunming-Montreal The promotion and incentivisation of sustainable practices
GBF (target: “excess nutrients lost to the environment by at are expected to contribute significantly to farmers’ transition
SECTOR CONTEXT least half including through more efficient nutrient cycling and journey.
use; reducing the overall risk from pesticides (…) by at least
half including through integrated pest management, based on Current transition support initiatives
In 2021, the farm gate and land use change represented 21% production processing51. Emissions from within the farm gate
science, taking into account food security and livelihoods”),
of global greenhouse gas emissions, and contributed for 39% of and from land use change, together, represented 67% of global BNP Paribas’ support to the sustainable transition of agriculture
the European regulations (Common Agricultural Policy, Fit for
methane (CH4), 74% of nitrous oxide (N2O), and 12% of carbon agriculture, agribusiness & food systems emissions. is already materialized by a pool of experts within BNP Paribas
55 and Farm to Fork targets on organic farming and pesticide
dioxide (CO2) emissions globally, all excluding pre and post- Polska Bank, on which the Group leverages to build up its pan-
reduction), as well as relevant national ones.
European competence with a dedicated sustainable agriculture
The sustainable transition of Agriculture cannot be analysed community. For instance, BNP Paribas Polska Bank offers a
Upstream Farm-gate Downstream
only through the climate prism, it needs to be holistically unique solution to its clients to estimate their GHG emissions,
addressed (as in the public strategies listed above). and evaluate potential for carbon reduction and storage
Agricultural Production Production: BNP Paribas proposes five inter-related sustainability drivers.
Farms Distribution Last mile in soils, depending on their farming practices (Agronomist
inputs inputs processing
The first three strongly focus on decarbonisation, and the last platform, with 30,000 active users).
Equipment Crops Trading Inputs (e.g. food Food processing Commercial two expand the approach to immediately related topics.
production Livestock Logistics additives) (e.g. milling, distribution In Italy, BNL is active in the financing of biomethane/biogas
Raw materials Equipment (e.g. meat & fish Retail & food (i) Biomethane, biogas and digesters, (ii) agrivoltaics and on-
Dairy Storage plants with EUR 128 million loans granted as of end of 2023
for refrigeration, processing,bio- service
Additional inputs farm solar: these renewable energy generation technologies
(incl. fertilizer processing, fuel production) (see Part II. Section 3. BNP Paribas supports the low-carbon
manufacture) packaging) Packaging hold promise for decarbonising on-farm energy use. With transition of all its clients).
growing recognition from governments of their potential
Legend In-scope Out of scope (and associated with subsidy schemes), adapted green Furthermore, BNP Paribas leverages its in-depth knowledge
financing solutions for such projects, at both farm and of European tech and innovative companies to support
cooperative level, can have a significant impact on the entrepreneurs enabling the Agri-Food transition through
sector’s decarbonisation. dedicated set-ups, namely in France (WAI), Belgium (IHubs),
PORTFOLIO DESCRIPTION APPROACH TO TARGET-SETTING
Poland (Innovative Companies), covering nearly a hundred
(iii) Sustainable agriculture practices which contribute to soil AgTech/FoodTech companies. Additionally, BNP Paribas
Value chain It was decided not to set quantitative net zero targets for preservation and enhance soil fertility while increasing invested in the capital of AgTech and FoodTech companies,
BNP Paribas’ credit portfolio in the agriculture sector, after carbon sequestration53 and minimising pollution (incl.
In its approach to the decarbonisation of its agriculture such as Klim, a German carbon farming platform that supports
taking into consideration the following: acidification, eutrophication and pesticides). These practices
portfolio, BNP Paribas, like several other financial institutions the agroecological transition of farmlands through carbon
and in line with WBCSD recommendations52, focuses on the • Agriculture is a very fragmented sector with a large variety are based on agroecology concepts such as organic farming credits in setting projects within the food production value
of commodities, different emission profiles per crop, product or regenerative agriculture54. chain, and Agriodor, a French producer of biobased alternatives
Farm segment, upstream from food processing activities. The
Farm segment scope 1 & 2 includes emissions from land use and country, local patterns of weather and soils, varying (iv) Sustainable water management: Rising stress on water to chemical pesticides for agriculture.
change up to the farm gate (crop livestock production process practices with different environmental footprints, etc. The resources have implications on agri-food systems as 72% of
and associated on-farm energy use). fragmented client base and the absence of climate data global freshwater use is for agriculture. Sustainable water
at client level create important challenges for portfolio management aims at reducing the dependency on water by
BNP Paribas’ exposure to agriculture (Farm segment) is alignment. adapting crop and plant variety, increasing diversification
essentially resulting from its retail activities in Belgium,
• Other technical challenges include nascent methodologies and providing water solutions to develop better irrigation
France, Italy and Poland. BNP Paribas’ portfolio is mainly
and the absence of suitable scenarios for target-setting. practices.
exposed to farmers involved in growing cereals, with other
Utilisation of statistical methodologies, which require further
activities such as dairy, pigs’ raising and breeding, poultry
developments, may help assess the emissions profile of the
farming, and viticulture. Thus, its portfolio is barely exposed
portfolio but would not be precise at the individual client or
to cattle farming or rice cultivation, which are two highly
farm level.
emissive agriculture commodities.
• While more work is required to precisely assess the emission
As of 31 December 2022, exposure to the Farm segment
intensity of BNP Paribas’ portfolio, a preliminary analysis
represented less than 0.4% of BNP Paribas' total gross exposure
shows that BNP Paribas’ agriculture portfolio is likely to be
to credit risk.
less emissive than the sector average due to its low exposure
to cattle and rice.
• The technical challenges listed above are shared by
many banks and very few financial institutions similar to
53
Regenerative agriculture principles aim to minimize soil disturbance, increase soil cover, 54
Source: https://www.mckinsey.com/industries/agriculture/our-insights/the-agricultural-
BNP Paribas have published quantitative climate targets for diversify crop rotation and intercropping, minimize the use of external inputs (such as transition-building-a-sustainable-future#/.
synthetic fertilizers and pesticides), increase natural and ecological habitat (such as
this sector so far. hedges, buffer strips, etc.) and integrate organic matter and livestock elements.
51
Source: FAOSTAT.
52
Source: World Business Council for Sustainable Development (WBCSD) An Introductory
Guide for Net Zero Target Setting for Farm-Based Agricultural Emissions. 60 61
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
Gross exposure to
Sector Climate methodology Benchmark Alignment progress
credit risk
Share of Reduction
Exposure Update
BNP Paribas Emission GHG Benchmark Baseline Target (target vs.
in-scope Data sources Metric Units Scenario (% change)
total exposure scope considered [year] [quarter-year] [year] baseline)
(€bn) [quarter-year]
(%)55 [year]
*As of Q4 2023, the Oil and Gas exposure reduction targets by 2025 are achieved. Please see the results p. 45.
55
Sector exposure corresponding to the value chain segments considered for the alignment metrics. 57
Drawn exposure to upstream and refining companies.
56
Credit exposure to upstream Oil and Gas, based on the portfolio financing indicator in the report on the 58
Subject to data and methodology availability.
application of the PACTA methodology.
62 63
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
Metric 2020 2021 2022 2023 2025 Target Investment portfolios (NZAM and NZAOA commitments)
Share of electrified vehicles (%) 4 7 14 15 >25 BNP Paribas Asset Management, member of NZAM
Carbon footprint (scope 1 & 2) of its investments in scope 2019 Reducing by 30% by 2025 and by 50% by 2030
64 65
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
66 67
IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050
30-33 ACPR: Autorité de contrôle prudentiel et de FPSO: Floating production storage and MW: Megawatt
Section – 2.2 Identifying the climate-related risk events
résolution (French Prudential Supervisory offloading
MWh: Megawatt-hour
and Resolution Authority)
FSTF: Financial Services Task Force
NACE: Nomenclature statistique des
ADEME: Agence de l'Environnement et
Section – 2.3 Assessing potential impacts of climate risks through FTE: Full-Time Equivalent (Employee) Activités Economiques (Classification of
de la Maîtrise de l'énergie (French public
climate scenario analyses and stress testing Economic Activities)
agency for energy efficiency) g: Gram
34-36
NEST: Network of Experts in Sustainability
These sections present metrics used by the Group to assess climate- AER: Annual Efficiency Ratio gCO2/km: Gram of carbon dioxide per
a) Disclose the metrics Transitions
related risks, in line the associated risk management processes kilometre
used by the organization ALMT: Asset and Liability Management
NGFS: Network of supervisors and central
to assess climate-related Treasury gCO2/kWh: Gram of carbon dioxide per
banks for Greening the Financial System
risks and opportunities in kilowatt-hour
BEV: Battery Electric Vehicle
line with its strategy and Part IV - METRICS, TARGETS & ALIGNMENT PROGRESS: NZAOA: Net Zero Asset Owner Alliance
gCO2e/MJ: Gram of carbon dioxide equiva-
risk management process. C2A: Climate Analytics and Alignment
Section - 1.1 Net zero alignment update of credit portfolio lent per mega joule NZAM: Net Zero Asset Manager initiative
CCCA: Collective Commitment to Climate
GDP: Gross Domestic Product NZBA: Net Zero Banking Alliance
The credit portfolio’s alignment methodology along with the sector- 41-61 Action
IV – METRICS AND specific target setting approach are disclosed with metrics selected by GFANZ: Glasgow Financial Alliance for Net NZE: Net Zero Emissions
CCIRC: Comité de Contrôle Interne, des
TARGETS BNP Paribas to assess risks and opportunities related to climate topics, Zero
Risques et de la Conformité (Internal NZE 2050: The IEA’s Net Zero Emissions by
in line with its strategy.
Control, Risk and Compliance Committee) GHG: Greenhouse Gases 2050 Scenario
CEO: Chief Executive Officer Gt: Gigatonne N2O: Nitrous oxide
CGEN: Comité de gouvernance, d’éthique, GW: Gigawatt OECD: Organisation for Economic Coopera-
Section - 2 Overview of BNP Paribas' main climate-related metrics,
des Nominations et de la RSE (Gover- tion and Development
targets, and alignment progress IAI: International Aluminium Institute
nance, Ethics, Nominations and CSR
62-65 PACE: Platform for Analysing Carbon
This section summaries the main metrics used by the Group to assess Committee) IAM: Integrated Assessment Model
Emissions
climate-related risks and opportunities. CH4: Methane IATA: International Air Transport Associa-
PACTA: Paris Agreement Capital Transition
CIB: Corporate and Institutional Banking tion
Assessment
Part I – STRATEGY CII: Carbon Intensity Factor ICAAP: Internal Capital Adequacy Assess-
PFC: Perfluorocarbons
ment Process
Section – 1.4 BNP Paribas reduces its own operational emissions CO2: Carbon dioxide PHEV: Plug-in Hybrid Electric Vehicle
ICE: Internal Combustion Engine
10 CO2e: Carbon dioxide equivalent is the
b) Disclose Scope 1, Scope RAS: Risk Appetite Statement
This section discloses the Group’s operational GHG emissions, i.e. number of metric tonnes of CO2 emissions ICT: Information and Communication
2, and, if appropriate, scope 1, scope 2, and scope 3 cat. 6 (business travels). Technology RAF: Risk Appetite Framework
Scope 3 greenhouse gas with the same global warming potential
(GHG) emissions, and the as one metric tonne of another green- IEA: International Energy Agency RCP: Representative Concentration
related risks. house gas Pathway
Part IV - METRICS, TARGETS & ALIGNMENT PROGRESS IMO: International Maritime Organization
COP: Conference of Parties REIT: Real Estate Trust Investment
Section - 2 Overview of BNP Paribas' main climate-related metrics, 62-63 IPCC: Intergovernmental Panel on Climate
targets, and alignment progress CoR: Cost of Risk Change REMIND: Regional Model of Investment
CRREM: Carbon Risk Real Estate Monitor and Development
IPCC (AR6): Sixth Assessment Report of
CRU: Commodities Reasearch Unit the Intergovernmental Panel on Climate RTK: Revenue Tonne Kilometre
Change
Section – 1.2 Alignment progress update on 2022 and 2023 44-50 CSR: Corporate Social Responsibility SAF: Sustainable Aviation Fuels
commitments IPS: Investment & Protection Services
DNV: Det Norske Veritas SBTi: Science-based Targets Initiative
c) Describe the targets IT: Information Technology
dwt.nm: deadweight tonne times nautical SME: Small and Medium-Sized Enterprise
used by the organization km: Kilometre
miles SMI: Sustainable Markets Initiative
to manage climate-related Section – 1.3 2024 new portfolio alignment targets
risks and opportunities EAD: Exposure At Default KPI: Key Performance Indicator
t: tonne or metric tonne
and performance against These sections present the main targets used by the Group to
EBA: European Banking Authority Kunming Montreal GBF: Global Biodiver-
targets. assess and manage climate-related risks and opportunities and the 51-57 TCFD: Task force on Climate related Finan-
sity Framework
performance in 2023 against these targets. In particular, it displays the ECB: European Central Bank cial Disclosures
2023 alignment progress updates in NZBA sectors in addition with new kWh: Kilowatt-hour
EMEA: Europe, Middle East, Africa UN: United Nations
sectors, with a description of the benchmark methodology and target-
setting approach. LCTG: Low-Carbon Transition Group
EPC: Energy Performance Certificates UNEP FI: United Nations Environment
LDV: Light-Duty Vehicle Programme Finance Initiative
ESG: Environmental, Social and Gover-
nance LNG: Liquefied Natural Gas URD: Universal Registration Document
EU: European Union Midcap: Mid-capitalization companies WBCSD: World Business Council for Sustai-
nable Development
EV: Electric Vehicle Mission Possible Partnership
WLTP: Worldwide harmonized Light
F-gases: Fluorinated greenhouse gases MJ: Megajoule
Vehicle Test Procedure
FC: Fuel-Cell vehicle Mt: Megatonne
68 69
Disclaimer
The figures included in this report are mostly unaudited (CSR Dashboard KPIs data are audited).
This report includes metrics and historical statements, which are subject to methodology and data uncertainties, as well as a number of
judgements, estimates and assumptions, which had to be made on these complex and evolving matters. It also includes forward-looking
statements based on current beliefs and expectations about future events. Forward-looking statements include projections and estimates and
their underlying assumptions, statements regarding plans, objectives and expectations with respect to future events, operations, products and
services, and statements regarding future performance and synergies. Forward-looking statements may be largely dependent on external
factors that are not under BNP Paribas’s control, in particular in relation to carbon emissions of entities financed by BNP Paribas and its
subsidiaries. In addition, forward-looking statements rely on methodologies and data, whose quality and availability are subject to changes.
Forward-looking statements are not guarantees of future performance, results or occurrences and are subject to inherent risks, uncertainties
and assumptions about BNP Paribas and its subsidiaries and investments, developments of BNP Paribas and its subsidiaries, banking industry
trends, changes in political, social and/or economic conditions globally, in particular energy prices, technological innovations, climate-related
events, as well as in regulations or in BNP Paribas’ principal local markets, and other unforeseen events or conditions. Those events are
uncertain; their outcome may differ from current expectations which may in turn significantly affect expected results. Actual results may
differ materially from those projected or implied in these forward-looking statements. Any forward-looking statement contained in this report
speaks as of the date of this report.
BNP Paribas undertakes no obligation to publicly revise or update any forward-looking statements in light of new information or future events.
However, forward-looking statements included in this report may be superseded by information contained in future BNP Paribas’s publications
such as reports, statements, or press releases.
The information contained in this report as it relates to parties other than BNP Paribas or derived from external sources, such as information
related to Scope 3 emissions, has not been independently verified and no representation or warranty expressed or implied is made as to, and
no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither
BNP Paribas nor its representatives shall have any liability whatsoever in negligence or otherwise for any loss however arising from any use
of this report or its contents or otherwise arising in connection with this report or any other information or material discussed.
The ESG Transparency and Performance team within Group CSR expresses gratitude to all BNP Paribas' employees who
contributed to the production of this report.
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